Excess Rainfall Product for the Caribbean Region - Developed by The CCRIF and Swiss Re

Abstract:

Small island states exposed to natural hazards are often in the worst position to absorb the financial impact of natural disasters. In a moment, they can lose a significant portion of their GDP and not have the resiliency to bounce back. Several leaders pushed to build their own resiliency after suffering from four hurricanes in just one year – Charley, Frances, Ivan and Jeanne, all swept through the region in 2004 and caused losses in excess of US $4 billion.

This push to build their own resiliency resulted in the creation of the Caribbean Catastrophic Risk Insurance Facility ("CCRIF"), a facility providing parametric earthquake and tropical cyclone insurance coverage to 16 Caribbean countries.

Working well for the past 7 years, the CCRIF has paid out 8 times for a total of more than US $32 million. This dual protection against earthquake and tropical cyclone has become a well-known success globally.

However, all stakeholders realized that considerable damage in the region is also caused by rainfall and flooding. This consistent realization was felt most recently, in December 2013, when Saint Lucia, St. Vincent and Dominica were ravaged by a torrential rainstorm, leaving several people dead, and causing massive damage to roads, infrastructure buildings and property.

Due to this additional exposure, the Caribbean sought out ways to further build their own resiliency by requesting coverage for this specific third peril. For the past 2 years, Swiss Re has worked closely with the CCRIF to create an xsr product that can benefit the region now and going forward, as the impacts of climate change are felt.

Excess rainfall is perhaps the most difficult peril of weather and climate modeling and there exists no scientific consensus on a methodology to underpin excess rainfall coverage. Its nature, prolonged and frequent, causes significant damage to small island states and the costs are only predicted to rise as the population and asset values increase and the climate changes. This product was effectively designed by building on satellite technology to estimate the amount of rainfall, ensuring quick payment to affected countries. The TRMM satellite data was enhanced from a 25 X 25 kilometer basis to a 1 X 1 kilometer basis by Kinanco, a modeling company contracted by the CCRIF.

It has been in place since July 2014 for 8 CCRIF member countries.