The deal to open up the Caribbean Catastrophe Risk Insurance Facility (CCRIF) to the seven-strong Council of Ministers of Finance of Central America, Panama and the Dominican Republic (COSEFIN) was formally signed in Washington DC on Saturday.
At the ceremony, Nicaragua was first to reach a participation agreement to join the programme. Other COSEFIN member states – Guatemala, El Salvador, Honduras, Costa Rica, the Dominican Republic and Panama – are expected to join CCRIF either later this year or in 2016.
The CCRIF scheme was established in 2007 as the world’s first multi-country catastrophe risk-pooling mechanism. It offers sovereign insurance against natural catastrophes at affordable premiums, with 16 Caribbean countries currently members.
Under the protection, countries receive financial support to meet costs in the aftermath of a disaster. This boost to fiscal resilience allows governments to respond to continue providing critical services. Since its inception, 12 payouts, totaling $35.6m, have been made to eight member governments, all within two weeks of each event.
Announcing the expansion, CCRIF chair Milo Pearson said there would be benefits to all members. It will allow for best practices in disaster risk management to be shared, he said, and for collaborative approaches to reducing vulnerabilities to be developed.
COSEFIN executive secretary Martín Portillo said the countries had concluded that joining the CCRIF was the most efficient and cost-effective insurance mechanism to pool risks.
‘This will allow us to reduce our countries’ fiscal vulnerability to the adverse effects associated with earthquakes, tropical cyclones, excess rainfall and other events,’ he added.
Jorge Familiar, World Bank vice president for Latin America and the Caribbean, praised the deal as ‘a real example of a regional public good where collective action has clear financial benefits and can help countries tackle the adverse impacts of climate change’.
‘We look forward to deepening our engagement with COSEFIN, the Caribbean Community and CCRIF as part of this ambitious regional initiative,’ he added.
