(CARICOM Secretariat, Turkeyen, Greater Georgetown, Guyana) As the Caribbean Community (CARICOM) forges ahead with the development a sufficiently coordinated framework for disaster risk management in agriculture, the Caribbean Catastrophe Risk Insurance Facility (CCRIF) is exploring the possibility of becoming “a catalyst for risk management innovation” in the sector.

This was disclosed by the Facility’s Supervisor, Mr. Simon Young who was speaking in the context of the Caribbean Agriculture Insurance Symposium on Disaster Risk Management which formally concluded today, 18 June, in Antigua.

The Symposium from June 16-19, has been coordinated by the CARICOM Secretariat, the Ministry of Agriculture of Antigua and Barbuda and the Inter-American Institute for Cooperation on Agriculture (IICA). The World Bank, the Caribbean Development Bank, the Food and Agriculture Organisation (FAO) of the United Nations, the Caribbean Disaster Emergency Management Agency (CDEMA) and Government of Australia Aid Programme have supported the event.

CCRIF was developed by CARICOM governments in response to the threat of hazards to small island economies and to sustainable development. After Hurricane Ivan inflicted severe damage to Grenada’s GDP, efforts were made to streamline this regional risk insurance facility.

CARICOM Heads of Government requested the World Bank’s assistance in the design and implementation of a cost-effective risk transfer programme for governments and in 2007, CCRIF was launched as the world’s first multi-national risk pool to cover sovereign risks for hurricane and earthquake catastrophes via parametric insurance.

Parametric insurance provides fast budgetary support to governments affected by major natural disasters such as hurricane and earthquakes, not based on actual losses, but on specified intensities of the natural disaster, in the specified location, as measured by an independent agency, allowing for total objectivity and rapid pay out.

Mr. Young said that the CCRIF functioned through the pooling of risk across a wide geographic area and provided “excellent diversification and access to coverage previously unavailable.” He said that the sustainability of the Facility was guaranteed through the pooling of a single re-insurance transaction, which improved access to global markets and ensured the sustainability of the Facility.

In recognition of the impact of climate change on the Region and more specifically on the variability it brings to hydro-meteorological hazards, he said the Facility had supported the first phase of a study on the economics of climate change adaptation for the Caribbean.

Against this backdrop, he said that CCRIF could play a pivotal role in the agriculture sector, through the development of innovative risk management strategies, focused specifically on agricultural risk.

The Facility could function in a technical capacity by advising on product designs, capacity building and education concerning parametric insurance and the concept was not widely known, Mr. Young stated.

He said that the already strong support it had from a broad range of stakeholders, was a platform on which it could play a critical role in the development and implementation of measures to mitigate risks in the agriculture sector, to encourage greater confidence for investment.

The Symposium heard that the Windward Islands Crop Insurance (WINCROP) was another illustration of an insurance initiative in the Region, which could be broadened and modeled in pursuit of a coordinated risk management agenda for agriculture.

In outlining the experience of the company in the coverage of farmers, WINCROP representative Ms. Hernica Ferreira said that it had recorded successes in responding to damages in the banana industry for farmers in Dominica, Grenada, Saint Lucia and St. Vincent after the devastating effects of storms and hurricanes.

Established in Dominica in 1987 with offices in Saint Lucia and St. Vincent, WINCROP’s objective is to provide coverage against losses of banana holdings by windstorm and volcanic eruption.

She said that two years after its establishment, WINCROP was called into action to service claims after Hurricane Hugo in 1989 and was able to approve 8,882 of the 9,937 claims received and pay out a total of EC$8M to farmers with 89% of this amount going to farmers in Dominica and 11% to St. Lucia.

WINCROP’s best experience in responding to a disaster, she said, was in 1995 when 17,144 claims were received based on 11 major storms and 14,905 of these claims were approved for payment, accounting for a pay out of EC$15.5M.

Ms Ferreira said the organisation had succeeded in carrying out its mandate to support the banana industry in times of disasters, but in recent times it had faced challenges associated with the decrease in grower populations - hence a reduction in premiums - due to the erosion of preferential export markets for banana.

Nevertheless, she said as the Region searched for an agricultural insurance framework, it could build on the experience of WINCROP in the banana industry.

CONTACT: piu@caricom.org