'Parametric Insurance' Based on Intensity of Event Better Alternative for Poorer Countries
- Melody Schreiber
- Dec 5, 2016
- 1 min read
On October 29, 2010, a tropical storm off the coast of the island nation of St. Lucia quickly gained force and mutated into a Category-2 cyclone. There was no time to prepare for a hurricane of these proportions, no time to evacuate.
Avalanches of thick mud and debris coursed through towns, caking the roads in impenetrable sludge, miring cars, settling into houses. Trees tangled and downed power lines. Roads cracked, rising and falling in asphalt waves, and bridges disappeared in the flood. People were swept away; some were never found. After the storm, communities on the island were cut off from food and water for days.
In the Caribbean, Hurricane Tomas wreaked $588 million in damage, mostly in St. Lucia. It was one of the most devastating storms the island had ever seen.
Afterwards, St. Lucia called upon the Caribbean Catastrophe Risk Insurance Facility (CCRIF), eventually receiving a payout of $3.24 million. The first time St. Lucia filed a natural-disaster claim was when a 7.4-magnitude earthquake shook the Caribbean in 2007—the same year CCRIF was formed.
CCRIF was, according to its CEO Isaac Anthony, the world’s first “multinational parametric insurance company.” In layman’s terms: it’s insurance for acts of God, designed to help countries rebound quickly after disaster.
UNMEER/Martine Perret
Comments