NU Online News Service, Jan.14, 12:40 p.m. EST

The Caribbean Catastrophe Risk Insurance Facility said Haiti'sgovernment as a member of its risk pooling facility will receive alittle under $8 million for earthquake damage.

Yesterday the Eqecat catastrophe risk modeling firm in Oakland,Calif., estimated economic damages from Tuesday's quake to be "inthe hundreds of millions of dollars."

CCRIF said the amount it will pay Haiti is approximately 20times the country's $385,500 premium for its earthquake coveragepolicy taken out as part of its disaster risk managementstrategy.

Based on calculations from the preliminary earthquake locationand magnitude data, the pool said the 7.0 quake was of sufficientsize to trigger the full policy limit for the earthquake coverage,effecting payment after a 14-day waiting period.

Nikhil DaVictoriaLobo, a Swiss Re Public Sector vice president,explained by e-mail that while the CCRIF policy limit for Haiti wasrelatively small, it demonstrates clearly how parametric insurancesolutions enhance the ability of governments to deal quickly withthe onslaught from catastrophes and reduce at least some of theassociated human devastation.

Swiss Re as part of its Public Sector client focus, collaborateswith the CCRIF to deploy country risk management practices in theCaribbean basin (including Haiti) as well as develop new parametricproducts for the region.

According to Mr. DaVictoriaLobo his company advocatespro-active, cohesive risk management plans for CCRIF that include acombination of prevention measures and risk transfer instrumentsand advance funding sources as a powerful antidote to alleviate thepain catastrophes.

CCRIF said in addition to providing parametric catastrophecoverage it has been assisting the Caribbean region to becomedisaster resilient by working with partner organizations such asthe Caribbean Institute for Meteorology and Hydrology (CIMH) andthe Caribbean Disaster and Emergency Management Agency (CDEMA) toprovide data and other technical assistance for better planningfor, response to, and recovery from natural catastrophes.

The pool noted that CIMH is currently running detailed weatherforecast models over Haiti to identify areas prone to landslidesfrom flash flooding in the areas that have been affected by theearthquake "and will facilitate proactive action."

CCRIF said it is "hopeful that the rapid payment of funds underHaiti's policy will assist the government and people of Haiti inaddressing immediate needs as they begin the recovery andrebuilding process."

CCRIF is owned, operated and registered in the Caribbean forCaribbean governments. It is designed to limit the financial impactof catastrophic hurricanes and earthquakes to Caribbean governmentsby quickly providing short-term liquidity when a policy istriggered.

The pool describes itself as the world's first and, to date,only regional fund utilizing parametric insurance, giving Caribbeangovernments the unique opportunity to purchase earthquake andhurricane catastrophe coverage with lowest-possible pricing.

CCRIF said it "represents a paradigm shift in the waygovernments treat risk, with Caribbean governments leading the wayin predisaster planning.

Sixteen governments are members of the fund. In 2007, CCRIF saidit paid out almost $1 million to the Dominican and St Luciangovernments after the Nov. 29, 2007 earthquake in the easternCaribbean, and in 2008, CCRIF paid out $6.3 million to the Turks& Caicos Islands after Hurricane Ike made a direct hit on GrandTurk.

Insurance Information Institute noted that Haiti's privateinsurance market is very small.

"Haiti is the poorest country in the Western Hemisphere, andpoor countries tend to purchase very little property insurancecoverage," said I.I.I. President Robert P. Hartwig in astatement.

"The fact that there is very little information about Haiti'sprivate insurance market suggests that the market is verysmall--likely not more than a few tens of millions of dollars,"added Mr. Hartwig. "Consequently, private insurer losses from the7.0 temblor on Tuesday, January 12, will be modest and will nothave a material impact on global insurance and reinsurancemarkets."

Beyond earthquakes, Haiti's insurance markets face challengesfrom frequent hurricanes, severe floods, landslides and mudslides,poor public safety infrastructure, and the fact that the countryhas a history of political and civil unrest, Mr. Hartwig noted.

He mentioned that some multinational firms with facilities inHaiti may be insured for losses under blank policies that respondto losses wherever in the world they occur.

London-based Axco Insurance Information Services in a December2009 report said concerning Haiti's property and casualty market:"Some 90 percent or more of Haiti's insured risks are situated inPort-au-Prince, but no information is available about aggregatesums insured."

Lacking official data, Axco estimated the total non-life premiumincome written in Haiti at $19 million in 2008, with the non-lifecategory consisting primarily of p&c policies for auto,homeowners and commercial insurance.

The huge amount of fatalities and property damage in Haiti isdrawing comparisons to the May 2008 southwest China earthquake thatkilled 87,449 people, according to Swiss Re.

Like Haiti, China had little private insurance coverage tooffset the severe economic damage the nation incurred. Swiss Reestimated that the Sichuan Province quake generated $366 million ininsured losses, even though the overall economic damages to Chinaas a whole were equal to $125 billion.

I.I.I. noted that earthquake damage in the U.S., other thanfires, is not covered under standard homeowners or businessinsurance policies, but coverage is usually available forearthquake damage in the form of a supplemental policy.