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Breaking News:

Turnquest: Low CCRIF payout part of risk

  • Peter Turnquest.

SLOAN SMITH
Guardian Staff Reporter
sloan@nasguard.com

Published: Sep 15, 2017

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Despite paying a premium of $2.6 million to the Caribbean Catastrophe Risk Insurance Facility (CCRIF) for The Bahamas’ hurricane insurance and receiving $234,000 in the aftermath of Hurricane Irma, Deputy Prime Minister Peter Turnquest said yesterday that the government must take the risks associated with the insurance premium in order to protect its assets.

In a press release on Wednesday, CCRIF announced that Hurricane Irma triggered payments of approximately US$29.6 million, with The Bahamas receiving $234,000.

The insurance facility explained that the calculations for The Bahamas were not made based on the impact of Irma, but on the aggregate deductible cover (ADC).

“The ADC represents a means by which CCRIF SPC can help its members when modelled losses fall below the attachment point, but where there are observed losses on the ground,” the release stated.

Speaking to The Nassau Guardian, Turnquest said, “If you understand insurance, you know that it is a risk sharing mechanism, generally.

“Such that, in the event that there is a catastrophic event, affecting a significant part of your population, that there is some mechanism to help cover the costs of that event.

“So it is very much a contingent policy, such that in the event of loss, you have some ability to mitigate some of the loss.

“So when you look at it from that perspective, it is not necessarily helpful to compare what you pay on annual premium as opposed to what you have received in any one payout.

“You then accept the risk that is associated with that.

“So we believe that fundamentally, based on the last year’s hurricane even as a guide, that we ought to take advantage of sharing the risk of climate change and hurricane and protecting our assets.”

During the budget debate, Prime Minister Dr. Hubert Minnis revealed that following Hurricane Matthew, The Bahamas would have received a payout amounting to about $32 million, which would have been the single largest payout to a country from the CCRIF.

However, The Bahamas missed out on receiving this payment from the CCRIF SPC due to the premium not being paid.

The IMF’s “Staff Concluding Statement of the 2017 Article IV Mission”, released on Tuesday, also points to the necessity of The Bahamas keeping its hurricane insurance.

The IMF notes that the “increasing reliance on ex ante insurance and mitigation policies against the risk of natural disasters should strengthen fiscal and economic resilience”.

The IMF also recommended the implementation of “a well-designed savings arrangement, as an additional buffer against the fall-out from natural disasters”.

 

 

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