Caribbean water companies to gain insurance protection against severe weather

In a groundbreaking move, the Caribbean Catastrophe Risk Insurance Facility (CCRIF) has announced that water utilities throughout the Caribbean will now be eligible for parametric insurance coverage.

This coverage aims to safeguard them against the financial aftermath of extreme weather incidents, including hurricanes, tropical storms, and significant rainfall events.

A deeper dive into the CWUIC

The establishment of the Caribbean Water Utility Insurance Collective (CWUIC) marks this new development, functioning as a segregated portfolio within CCRIF.

As a pioneer in its field, CCRIF is recognized as the first multi-country, multi-peril risk pool on a global scale. With a portfolio catering to 19 Caribbean governments, four Central American administrations, and three Caribbean electric utilities, CCRIF has a broad spectrum of offerings.

Adding to its extensive range, the water utilities coverage will be the latest, being the sixth parametric insurance product on the CCRIF’s list.

CCRIF's proven track record

CCRIF chief executive officer, Isaac Anthony shared that the CWUIC initiative taps into CCRIF’s rich, 16-year legacy in providing parametric insurance solutions.

According to Anthony, this offering is specifically tailored to counter natural hazards, catering to both governmental bodies and Caribbean electric utility establishments.

CCRIF said that the birth of CWUIC has been two years in the making. The Inter-American Development Bank (IDB) has played a pivotal role, extending both technical and financial support for its structure.

The task of developing the insurance model, which will form the foundation for the water utilities insurance product, was undertaken by CCRIF.

Potential clients and CWUIC’s holistic vision

About 35 water utilities spread across 29 Caribbean territories have been earmarked as potential clientele.

However, the vision for CWUIC is not restricted to insurance alone. It aims to be a beacon of expertise in disaster risk management and financing for water utilities.

This vision encompasses emergency response planning support, post-disaster restoration and rebuilding, and of course, the provision of parametric insurance to bolster water utilities during and after natural calamities.

Additionally, CWUIC is poised to offer advisory services and technical assistance. These services aim to identify and frame pivotal projects that elevate the resilience of water and wastewater utilities against natural threats.

Notably, the IDB secured a grant of US$500,000 from the Coca-Cola Foundation. This grant will fund feasibility studies focusing on water utility projects that emphasize resilience.

The significance of prompt liquidity post-disaster

Prompt financial relief post-disaster is crucial for water utilities. Such rapid liquidity ensures swift restoration of water supply, a necessity in post-disaster recovery.

A testament to this was an earlier payout by CCRIF to a member in the Eastern Caribbean. This payout facilitated swift repairs to the country's principal water treatment facility, which supplied several other plants on the island.

CCRIF said it is committed to providing payouts within 14 days after a member's policy is triggered, and since its inception in 2007, CCRIF has made 60 payouts totaling US$261.8 million to 16 of its member governments.