The Editor, Sir:

The Caribbean Catastrophe Risk-Insurance Facility (CCRIF) welcomes the kind of constructive commentary found in last Sunday Gleaner's editorial 'Revisit Regional Risk-Insurance Facility', and would like to thank The Gleaner for its insightful editorial and support of the facility's concept.

We would also like to publicly express our condolences to the people and Government of Jamaica for the losses and damage suffered as a result of Tropical Storm Gustav. As carried in your paper, the CCRIF will not make a payout to the Government of Jamaica as a result of Tropical Storm Gustav, because although it caused damage, the losses estimated were not extensive enough to categorise the impact as catastrophic.

As defined in the Government of Jamaica's CCRIF hurricane policy, the Government would qualify for payout if hit by a hurricane that causes wind damage likely to occur less often than once in every 15 years. Events causing the level of wind damage seen from Tropical Storm Gustav are likely to occur significantly more often.

payout

Hurricane Ike, which two weekends ago barrelled through The Turks and Caicos Islands, is a good example of the level of damage that would trigger a payout from the facility. The hurricane caused severe economic and physical damage to the government of the island chain, damaging about 85 per cent of the infrastructure on Grand Turk, the capital.

The Turks and Caicos government will receive a payout of approximately US$6.3 million from the CCRIF (over six times its annual premium) to help fund its recovery efforts until other sources of funding become available. This payout demonstrates the successful way in which the CCRIF res-ponds to events it was designed to cover. The facility anticipates settling the government's claim in full on or soon after September 22.

We do agree with the editorial's assessment that rainfall/flood coverage is desirable and have made this a top priority. As reported in The Gleaner, the Caribbean Institute of Meteorology and Hydrology is completing a rain/flood insurance-feasibility study on behalf of the CCRIF, with the results expected in October. To that end, immediately after Tropical Storm Gustav, a member of that team was in Jamaica to collect data in order to accurately determine the country's flood risks and the various effects of heavy rainfall over a certain period of time.

Atlantic Hurricane Season

It is our hope that the result of the study will prove favourable, allowing the facility to offer the product in time for the start of the 2009 Atlantic Hurricane Season, offering our member governments access to a greater variety of coverage.

As for the provision of agricultural insurance, the CCRIF is closely monitoring the efforts of the Jamaican government, which has requested assistance from the World Bank to develop a structured risk-management programme for the agricultural sector. We look forward to being able to assist our member governments once a formal mechanism for quantifying and underwriting this type of risk has been put into place.

The CCRIF was created on behalf of Caribbean governments to quickly provide short-term liquidity after a catastrophic hurricane or earthquake event. We remain committed to fulfilling our purpose, ensuring that the Facility remains relevant to the 16 Caribbean governments we serve.

I am, etc.,

Dr SIMON R. YOUNG

Facility Supervisor

Caribbean Catastrophe Risk

Insurance Facility

syoung@ccrif.org