2011年-世界发展银行全球_Reducing_Financial_Vulnerability_to_Natural_Disasters_in_the_Caribbean___A_Review_of_CCRIFs_Operation_After_Its_Third_Season_124页_5mb

Summary of Reducing Financial Vulnerability to Natural Disasters in the Caribbean: A Review of CCRIF's Operation After Its Third Season

Core Content

The document presents a comprehensive review of the Caribbean Catastrophe Risk Insurance Facility (CCRIF) after its third year of operations (June 1, 2009–May 31, 2010). It evaluates CCRIF's performance, financial stability, governance, and strategic initiatives, and offers recommendations to enhance its operations and effectiveness.

Main Objectives

CCRIF was established in May 2007 by CARICOM to provide a rapid financial response to natural disasters, specifically hurricanes and earthquakes. It offers parametric insurance, which pays out based on predefined hazard indicators rather than actual damage assessments, ensuring quick access to funds for disaster recovery.

Key Events and Payouts

• Major Insurable Event: The magnitude 7.0 MW earthquake in Haiti on January 12, 2010, was the only event that triggered a payout in 2009–2010. CCRIF paid out $7.75 million to Haiti within 14 days, fulfilling its primary objective of providing immediate liquidity for post-disaster needs.
• Other Events: No other earthquakes or hurricanes met the criteria for payouts during the 2009–2010 season. The 2009 hurricane season was notably mild, with only nine tropical storms forming, of which three became hurricanes, none of which caused payouts.

Financial and Operational Highlights

• Financial Stability: CCRIF's assets surpassed the $100 million target, and its financial strength continues to grow. The Facility guarantees payouts up to $20 million, assuming no more than one catastrophic event every 1,000 years.
• Budget Trends: The overall budget increased in 2009–2010 due to the launch of the technical assistance program and increased outreach efforts. However, it remained flat in 2010–2011, with core operational costs kept within 5% of gross premium income.
• Policy Renewals: All 16 members renewed their policies for 2010–2011. Premiums were reduced by 12.5% for 2010–2011, marking the third consecutive reduction. Members adjusted their coverage mix, with most increasing earthquake coverage and reducing hurricane coverage.

Governance and Operational Developments

• Operational Structure: CCRIF maintained an efficient and lean structure, updated its Operations Manual, and reviewed its Strategic Plan to include governance and accountability as key objectives.
• Service Providers: Concerns were raised about the lack of competition in service provider contracts and the concentration of expertise, prompting the Board to consider reconfiguring roles or transitioning to full-time staff.
• Director Terms: The Board began addressing the issue of Directors' terms being bunched, suggesting the possibility of staggering terms to improve business continuity.

Strategic Initiatives

• Technical Assistance: CCRIF launched a technical assistance program, focusing on the Economics of Climate Adaptation (ECA) project. This was supported by CaribRM, McKinsey & Company, and Swiss Re, and involved collaboration with UN-ECLAC and CCCCC.
• Scholarships and Outreach: CCRIF introduced a limited scholarship program for education in insurance and disaster risk reduction and continued its outreach through partnerships and events like the Caribbean Conference on Comprehensive Disaster Management.
• Innovation: CCRIF finalized its second-generation Hazard Loss Estimation Model (HLEM), which is critical for reinsurance negotiations. It also began developing an excess rainfall insurance product, though progress has been slow due to dependency on KAC.

Key Recommendations

• Operational and Governance:

  • Consider reconfiguring service provider roles or transitioning to full-time staff.
  • Streamline procedures for appointing new Directors while maintaining CARICOM and CDB's roles.
  • Stagger Directors' terms to improve continuity.

• Budget and Spending:

  • Adopt a uniform budget format for easier cross-year comparisons.
  • Set the annual budget for early June.
  • Ensure discretionary spending is closely consulted with members and stakeholders.
  • Assess R&D expenditures based on their projected impact on future income.

• Reinsurance and Risk-bearing Capacity:

  • Commission periodic actuarial assessments to evaluate solvency and risk strategies.
  • Use the Dynamic Financial Assessment model to adjust pricing and reinsurance in response to changes in reserves and market conditions.
  • Address concerns from reinsurers regarding the second-generation HLEM.

• Investment Strategy:

  • Balance investment and insurance risks to ensure diversification.
  • Consider using a longer-term benchmark than the one-month LIBOR cash rate.

• Pricing and Premiums:

  • Refine pricing policy to account for loss volatility and annual average loss.
  • Evaluate if higher risk retention or reduced premium multiples are feasible based on reserve levels.

• Non-financial Risks, Transparency, and Consultations:

  • Publish key business principles for stakeholder consultation.
  • Improve transparency in technical assistance and ensure members understand attachment and exhaustion points.

• Technical Assistance, Partnerships, and Outreach:

  • Ensure the scholarship program is transparent and accessible.
  • Coordinate with donors on community-level disaster mitigation projects.
  • Hold regular meetings with donor representatives to exchange insights.
  • Conduct an independent evaluation of CCRIF's contributions to disaster risk reduction after the MDTF is fully drawn down.

• Innovations:

  • Assess R&D providers' capacity to deliver new products on time.
  • Develop a structured communications and sales strategy for the excess rainfall product to set realistic expectations.

Conclusion

CCRIF has demonstrated effectiveness in providing rapid financial support following the Haiti earthquake, fulfilling its primary mission. The Facility continues to strengthen its financial position, expand coverage, and innovate in disaster risk financing. However, it faces challenges in governance, operational continuity, and the development of new products. The Board is advised to consider the above recommendations to ensure CCRIF remains a robust and sustainable mechanism for disaster risk management in the Caribbean.