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Caribbean cat pool now operating


WASHINGTON—A multinational pool developed by the World Bank to provide Caribbean governments access to natural catastrophe insurance began offering coverage last week.

The Caribbean Catastrophe Risk Insurance Facility officially launched last Friday, which marked 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 participating countries (see box) and by donations from other nations and 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 in Washington, 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.