The Caribbean Catastrophe Risk Insurance Facility (CCRIF) and Guardian General Insurance Limited signed a Memorandum of Understanding to offer individuals and organisation such as cooperatives and NGOs the ability to protect themselves and their members against financial losses that result from extreme weather associated with wind and rain. Guardian General Insurance Limited will provide access to the Livelihood Protection Policy (LPP) – a parametric microinsurance product designed to help protect the livelihoods of low-income persons such as small farmers, tourism workers, fishers, market vendors, day labourers, and small entrepreneurs, by providing quick cash pay-outs following extreme weather events (specifically, high winds and heavy rainfall).
CCRIF’s CEO, Isaac Anthony welcomed Guardian General Insurance as a partner: “We see this partnership between CCRIF and Guardian General Insurance Limited as a win-win. We are encouraged that Guardian General has included the CRAIC project not as an add-on but as part of its overall business strategy and views this collaboration as key and a new challenge that would afford them the opportunity to engage with new clients who can potentially purchase other products that they may have on offer”.
By aligning microinsurance to its overall business strategy, Guardian General has signalled its intent to invest time and resources in product development, regulatory approvals and product roll-out, and ultimately to have a major stake in the success of the CRAIC project and the roll-out of the LPP across the Caribbean. Guardian is demonstrating its commitment to the persons who will benefit the most from having the product and sees the scaling up of the LPP as being seamless with its existing business practices.
Guardian General’s President, Dean Romany stated, “Parametric products can be instrumental in alleviating the immediate negative financial impact on an underserved portion of our population, such as SME owners or self-employed individuals in the aquacultural, agribusiness, food & beverage, construction, hospitality, and transportation sectors.”
The LPP was developed under the Climate Risk Adaptation and Insurance in the Caribbean Project (CRAIC), which has been promoting microinsurance for climate risk in the Caribbean since 2011. Implemented by Munich Climate Insurance Initiative (MCII), CCRIF SPC, ILO Impact Insurance, Munich Re and DHI, the project is supported by the International Climate Initiative of the German Federal Ministry for the Environment, Nature Conservation, and Nuclear Safety.
CRAIC was the first project of its kind in the Caribbean region and was designed as a learning project, allowing the project consortium to capture lessons learned during the first two implementation phases. The team has learned many valuable lessons from the initial introduction of the LPP in three original pilot countries in 2013: Jamaica, Grenada and Saint Lucia. The LPP immediately demonstrated its value when policy holders – mainly small farmers – in Saint Lucia received payouts on their policies after the “December rains” that affected the Eastern Caribbean that year (2013). As with CCRIF’s sovereign parametric policies, payouts were made within 14 days. In the years since, policy holders have received payouts after a number of events such as Hurricane Matthew, when 31 fishers and farmers in Saint Lucia received US$102,000.
The MOU signing today took place at the launch of the Transition Phase of the project. The Transition Phase to be led by CCRIF, will use the lessons learned from the first 10 years of the project to promote wider access to the LPP within the five pilot countries Belize, Grenada, Jamaica, Saint Lucia and Trinidad and Tobago. The intent is to fully roll out the LPP in all CCRIF member countries at the end of the Transition Phase. According to CCRIF CEO, Isaac Anthony. “What is key for us at CCRIF, is that Guardian General operates in almost all of CCRIF’s 19 Caribbean member countries – and we see this as a first step towards scaling up and making this innovative product available across the 19 Caribbean countries that CCRIF operates in. With Guardian General and their networks across the region, we will have multiple distribution channels for persons to access the LPP and also to receive payouts.”
Soenke Kreft, Executive Director of MCII was enthusiastic about the next phase: “This moment represents a new era in the relationship between the Munich Climate Insurance Initiative and CCRIF SPC. We at MCII are thrilled that CCRIF SPC is stepping into this new role, scaling up access to microinsurance products through leadership and partnerships with Caribbean insurers, governments and stakeholders.”
During the transition phase, the project consortium will be working with Guardian General Insurance Limited and its teams across the five pilot countries to obtain the necessary approvals and to build on lessons learned to scale up access to a refined Livelihood Protection Policy. The team also will work closely with governments to align microinsurance with social protection strategies as part of an overall strategy to close the protection gap. The project will work with policy makers, regulators, and relevant ministries of government to create an enabling environment for the growth of climate risk insurance and to embed it within local and national disaster risk reduction and/ or sustainable development strategies. These activities are intended to further build social and economic resilience of vulnerable populations, increase adaptive capacity that reduces poverty in keeping with the thrust of leaving no one behind and the Sustainable Development Goals.