Caribbean Development Bank

Published purpose

Following the devastation caused by natural disasters in the Caribbean in 2004, the Caribbean Community (CARICOM) member states asked the World Bank for assistance with gaining access to affordable and effective disaster risk financing arrangements. In response, the World Bank developed an insurance mechanism called the Caribbean Catastrophe Risk Insurance Facility (CCRIF). The CCRIF allows Caribbean countries to pool natural disaster risks, reduces the cost of insurance, and ensures swift payment of claims. It allows CARICOM governments to purchase insurance coverage akin to business interruption insurance that provides them with immediate liquidity in the event of a hurricane or earthquake. Because of the speed at which claim payments are processed, the instrument is particularly useful for financing immediate post-disaster recovery needs while the affected country seeks funds from other sources for longer-term reconstruction.