WFP and Dominica Sign an Agreement Linking Sovereign Climate Risk Insurance Payouts to Social Protection

The United Nations World Food Programme (WFP) and the Government of the Commonwealth of Dominica signed an innovative agreement to strengthen the ability to deliver assistance to the most vulnerable people following a climate shock by linking social protection systems to the payouts made by the CCRIF SPC (formerly known as the Caribbean Catastrophe Risk Insurance Facility).

“Through this pilot project, WFP has strengthened the Government of Dominica’s access to disaster risk financing,” said Denise Edwards, Acting Finance Secretary. “We welcome this initiative as we strive to build the financial resilience of the vulnerable against disasters and hazardous impacts. This assistance will also allow the government to meet its parametric insurance coverage for tropical cyclones. We express our profound gratitude to WFP as we continue to partner and collectively contribute to Dominica’s sustainable development goals.”

Since 2007, Dominica has been a member of the CCRIF SPC, a segregated portfolio company (SPC) that provides insurance coverage for catastrophic hurricanes, earthquakes and excess rainfalls. The country has purchased insurance coverage and received payouts following major climatic events. Disbursements are made within 14 days. Since 2007, the company has made 54 payouts totalling US$ 245 million to 16 of its members states in the Caribbean and Central America.

“We are pleased to see the linkages between CCRIF SPC’s payouts and social protection ‘in action’. We view this WFP initiative as innovative, and we are pleased to be a part of it, to enable timely and efficient assistance to those most in need following a natural disaster in keeping with the principle of ‘leaving no one behind’,” said Isaac Anthony, Chief Executive Officer, CCRIF SPC. According to Anthony, the initiative shows that parametric insurance enables social protection policies and strategies to become more shock responsive, facilitating both vertical and horizontal expansion of a country’s social protection systems when most needed.

WFP is contributing a total of US$ 300,000 over a two-year period, towards the premium for the CCRIF SPC Tropical Cyclone Policy for the 2021/22 and 2022/23 policy years so that a portion of payouts can be channelled through national social protection programmes following a tropical cyclone event. This innovative approach will enable rapid support to affected populations in the form of cash payments.

“WFP is honoured to be a chosen partner in this bold and innovative step taken by the Government of Dominica,” said Regis Chapman, Country Director and Representative of WFP Caribbean office in Barbados. “This effort will improve national preparedness and disaster risk management efforts and put Dominicans at the centre of response and recovery efforts in times of crisis.”

WFP has been working with the government since 2017 on strengthening social protection systems to make them more shock responsive, as part of a broader Technical Assistance Agreement that also aims to strengthen food security and nutrition interventions, disaster risk finance strategies and systems, emergency preparedness and response planning, and provide emergency response support.

As a small island developing state, Dominica is highly vulnerable to the growing intensity of climate shocks. In 2015, Tropical Storm Erika resulted in damage and losses equivalent to 90 percent of the GDP. Two years later, Hurricane Maria caused widespread devastation, causing loss of life and livelihoods and significant damage – equating to 224 per cent of GDP. With the mission to make Dominica the world’s first climate resilient nation, the government recognized an opportunity to link disaster risk financing to its social protection system.

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