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Caribbean catastrophe risk pool expands Central American membership

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The Council of Ministers of Finance of Central America, Panama and the Dominican Republic and CCRIF S.P.C., formerly known as the Caribbean Catastrophe Risk Insurance Facility, have signed a memorandum of understanding that enables Central American countries to formally join the facility to access sovereign catastrophe risk insurance, the World Bank said in a statement.

At the same ceremony, the Nicaraguan government signed a participation agreement with CCRIF for Nicaragua to become the first Central American country to formally join the facility.

The other member nations of the Council of Ministers of Finance of Central America, Panama and the Dominican Republic are expected to formally join the Caribbean facility later this year and in 2016, said the statement.

Established in 2007, CCRIF is the world’s first multi-country catastrophe risk pool which offers sovereign insurance to its members against hurricanes, earthquakes and excess rainfall.

The World Bank provided the initial finance and technical advisory services to establish the Caribbean Catastrophe Risk Insurance Facility in 2007, and in 2014 the bank supplied resources to finance entrance fees to the facility for Honduras and Nicaragua, as well as annual insurance premiums for four years

“This insurance will allow us to strengthen financial resilience to natural disasters and continue our efforts to reduce poverty and respond to climate change challenges as part of our National Human Development Plan,” said Ivan Acosta, minister of finance of Nicaragua, in the statement

“After exploring options for engaging in sovereign disaster risk financing, Central American countries concluded that joining the Caribbean Catastrophe Risk Insurance Facility was the most efficient and cost-effective insurance mechanism to pool our risk”, Martín Portillo, executive secretary of the Council of Ministers of Finance of Central America, Panama and the Dominican Republic, said in the statement.