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A multinational pool developed by the World Bank to provide Caribbean governments access to natural catastrophe insurance began offering coverage this week.
The Caribbean Catastrophe Risk Insurance Facility officially launched Friday, which marks the start of the 2007 hurricane season. The $110 million reinsurance program, which is the world's first multinational catastrophe insurance pool, was announced earlier this year (BI, March 5). The Cayman Islands-registered facility is funded by premiums paid by member countries and by donations from other nations and the World Bank.
The countries participating in the facility are: Anguilla, Antigua and Barbuda, Bahamas, Barbados, Belize, Bermuda, Cayman Islands, Dominica, Grenada, Haiti, Jamaica, St. Kitts and Nevis, St. Vincent and the Grenadines, Trinidad and Tobago, and Turks and Caicos Islands, according to the World Bank.
The CCRIF's insurance program, placed by Benfield Group Ltd., is a combination of traditional excess-of-loss reinsurance and a funded cat swap agreement to cover parametric insurance policies issued by the facility.
Under CCRIF's four-layer insurance program, the pool retains a first layer of $10 million, while reinsurers write the second and third layers for $10 million and $15 million, respectively. The top $70 million layer is financed with $50 million of reinsurance of $20 million of coverage through the cat risk swap.
Munich Reinsurance Co. of Germany took the lead on the reinsurance coverage, with France's Paris Re and London-based Hiscox P.L.C. acting as following markets.
Additionally, Munich Re, along with the World Bank, has agreed to a cat risk swap allowing up to $20 million assumed by the World Bank to be passed on to Munich Re.
The CCRIF model could be adopted by other regions in the future, according to Georg Daschner, a member of Munich Re's board with responsibility for European and Latin American business.
"The innovative coverage concept developed here can be exported to other countries," he said in a statement.