Risk insurance builds climate and disaster resilience in Central America and the Caribbean

Source(s): World Bank, the
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With co-financing from a World Bank administered multi-donor trust fund (MDTF), the Caribbean Catastrophe Risk Insurance Facility Segregated Portfolio Company (CCRIF SPC) offers sovereign insurance for earthquakes, tropical cyclones, and excess rainfall to Caribbean and Central American countries. Currently, 19 countries in the Caribbean and 3 in Central America have memberships that through the years translated into 54 payouts totaling $245 million benefiting over 3.5 million people.


The region comprising Central America and the Caribbean is characterized by great cultural and environmental diversity, and is also vulnerable to natural hazards including earthquakes, hurricanes, and floods. Recent disasters that have affected the region include the record-breaking hurricane season of 2017, with two category 5 storms, as well as the devastating earthquakes that struck Haiti in 2010 and 2021. The human and economic losses caused by such disasters hinder the sustainability of development processes in the region. As a result, many governments face growing gaps in financing to respond to disasters; this may necessitate additional borrowing to meet the demands of emergency response, which increases their financial exposure, and limits support to already-overloaded emergency systems.


To address this challenge, a World Bank project sought to improve the affordability of high-quality sovereign catastrophe risk transfer associated with earthquakes and climate-related events for countries  participating in CCRIF SPC. Supporting climate risk insurance products is critical for the World Bank’s priorities on climate finance innovations that promote adaptation and resilience at the sovereign level.  Through the project’s innovative insurance mechanism, rapid payouts help member countries finance their initial disaster response, mitigating the short-term cash flow problems developing economies suffer after major disasters, and helping member countries to maintain basic government functions after a catastrophic event.

The cost-effectiveness of CCRIF SPC’s products is enhanced by pooling risks across member countries to optimize their access to shared reserves and diversified coverage from the international reinsurance market. 

In the context of the COVID-19 pandemic, the expansion of donor support through the World Bank enabled CCRIF SPC to scale up premium discounts for members while ensuring the long-term sustainability of the insurance mechanism.


Since 2007, CCRIF has provided 54 payouts to 16 of its members for approximately $245 million paid within 14 days of the disaster.

  • Since 2007, CCRIF payouts have benefitted over 3.5 million persons in the Caribbean and Central America. Use of payouts over the years has included providing food, shelter and medicine for affected people; stabilizing drinking water plants; providing building materials for people to repair their homes; repairing critical infrastructure such as roads, bridges, hospitals and schools; payment of government salaries; and support for agriculture, among other uses as shown in the chart below.
  • The 2020 Atlantic hurricane season has been the most active hurricane season on record and CCRIF has made 6 payouts totaling US$21.9 million – all within 14 days of the event. Four payouts were to countries in Central America- Nicaragua and Panama- and 2 payouts for countries in the Caribbean- Jamaica and Trinidad and Tobago.

The largest payout in CCRIF’s history was made to Haiti in August 2021 in the amount of nearly $40 million following the 7.2M earthquake.

Bank Group Contribution

The World Bank, through the CCRIF MDTF, provided grants totaling 23,750,000 to help finance this project. The CCRIF MDTF channels grant resources from the European Union, Canada, the United States, and the Federal Republic of Germany. The Global Facility for Disaster Reduction and Recovery (GFDRR), has also provided grants channeled from the European Union.  Between 2015 and 2021, approximately $46.7 million has been provided to CCRIF SPC through recipient executed grants and with complementary bank executed technical assistance to build technical capacity in the region. Currently, CCRIF SPC provides its members with over $500 million in joint reserves and claims-paying capacity backed by international reinsurance.   


Member CCRIF was developed under the technical leadership of the World Bank and with a grant from the Government of Japan. It was capitalized through contributions to a Multi-Donor Trust Fund (MDTF) by the Government of Canada, the European Union, the World Bank, the governments of the UK and France, the Caribbean Development Bank and the governments of Ireland and Bermuda, as well as through membership fees paid by participating governments. In 2014, a second MDTF was established by the World Bank to support the development of CCRIF SPC’s new products for current and potential members and facilitate the entry of Central American countries and additional Caribbean countries. The MDTF currently channels funds from various donors, including Canada, through Global Affairs Canada; the United States, through the Department of the Treasury; the European Union, through the European Commission, and Germany, through the Federal Ministry for Economic Cooperation and Development and KfW. Additional financing has been provided by the Caribbean Development Bank, with resources provided by Mexico; the Government of Ireland; and the European Union through its Regional Resilience Building Facility managed by the Global Facility for Disaster Reduction and Recovery (GFDRR) and The World Bank.

Looking ahead

Inspired by the CCRIF SPC example, the World Bank has supported countries in the Southeast Asia and the Pacific to establish sovereign catastrophe risk pools that have evolved into regional coordination mechanisms through which the governments can more efficiently transfer risk to financial markets. Governments rely on the World Bank’s knowledge of its member countries, its in-house expertise on disaster risk management, and its reputation for impartiality in the international capital and reinsurance markets. Long-term sustainability is promoted through CCRIF SPC’s drive for innovation with the development of new sectoral products for Central America and the Caribbean, including unique coverages to support fisheries and public utilities.

Project sustainability relies on both the CCRIF SPC’s continuous operation and on the ability of participating countries to afford the annual premiums for insurance coverage. The CCRIF SPC’s financial stability depends on its capacity to cover payouts to its members for eligible disasters without depleting its financial reserves, and its ability to attract new members and sustain business. Additionally, the countries’ willingness to continue purchasing insurance coverage annually after project closing depends on their understanding of the parametric insurance instrument, the added value it provides for their DRFI strategies, as well as the value for money of the offered products. Because of the COVID-19 pandemic, all CCRIF SPC member countries are facing fiscal constraints, so the deeper discounts on risk transfer products provided by the CCRIF SPC are critical for maintaining and expanding coverage levels in the region, subject to the consistency of such discounts with the CCRIF SPC’s financial survivability and long-term sustainability.  

“CCRIF SPC provides parametric insurance coverage to Caribbean and Central American governments to limit the financial impact of tropical cyclones, excess rainfall and earthquakes when a country´s policy is triggered. CCRIF parametric insurance is designed to pre-finance short-term liquidity or close the protection gap, allowing countries to begin recovery efforts immediately after a catastrophic event and provide support to the most vulnerable in their population. The 2020 Atlantic hurricane season is the most active hurricane season on record and CCRIF has so far made 6 payouts totaling US$21.9 million – all within 14 days of the event. Four of these payouts were to countries in Central America." 
- Isaac Anthony, Chief Executive Officer CCRIF SPC (formerly the Caribbean Catastrophe Risk Insurance Facility)

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