Aon Benfield, the world’s premier reinsurance intermediary and capital adviser, today announced that it has successfully renewed the reinsurance programme of one of the world’s most prominent multi-government catastrophe insurance pools.
All 16 Caribbean member governments renewed their catastrophe policies with the Caribbean Catastrophe Risk Insurance Facility (CCRIF) for the 2009/10 policy period. They were able to take advantage of a 10 percent decrease in premium costs from the CCRIF by increasing coverage for hurricanes, earthquakes or both for the same premium as last year. Notably, rates also decreased by 10 percent for the 2007/2008 policy period, making this year’s premium the lowest yet.
The CCRIF was established in 2007 on behalf of the Caribbean Community (CARICOM) heads of government under the guidance of the World Bank, with donor funding to provide immediate liquidity in the aftermath of a catastrophe event.
The Caribbean Development Bank has joined the World Bank this year in providing premium financing support to some CCRIF participants as they faced budgetary tightening due to the global economic crisis. CCRIF leverages its own capital into a higher level of claims-paying capacity through the purchase of reinsurance.
Aon Benfield has expanded this year’s panel of reinsurers to include Partner Re, which joins Munich Re, Swiss Re, Paris Re and Hiscox in providing traditional risk transfer capacity to CCRIF. Aon Benfield Securities facilitated a separate capital markets transaction with the World Bank Treasury that provides further non-traditional capacity.
Dominic Christian, Chief Executive Officer of Aon Benfield International, said: “The CCRIF programme is now into its third year, and has been successfully expanded each time it has been renewed. It provides vital capacity to its member governments, and has proved its ability to make payments following a catastrophic event – in 2008, CCRIF paid approximately $6.3m to the Turks and Caicos Islands in the aftermath of Hurricane Ike. Aon Benfield is very proud to have been associated with CCRIF since its inception. It requires from us absolutely seamless teamwork between our Caribbean transactional, catastrophe modelling, financial modelling and capital markets teams.”
Isaac Anthony, Permanent Secretary in the Ministry of Finance in Saint Lucia, and a member of the Facility’s board, added: “We have been grateful for the financing support of the World Bank. We are also grateful for the support offered by the Caribbean Development Bank to not only Saint Lucia but several other Caribbean governments in meeting premium obligations in this year of harder economic times. We realise the importance of remaining a member of the Facility, particularly given the reduced financial capacity which we and many of our CARICOM partners would have available to deal with a major natural catastrophe event.”
All CCRIF policies are renewed on 1 June at the start of the Atlantic Hurricane Season. In addition to coverage for wind damage, countries exposed to earthquake risk also purchase coverage for that peril; the 28 May earthquake off the north coast of Honduras was felt in a number of CCRIF member countries and serves as a reminder of the ever-present earthquake risks faced by the region.