The Inter-American Development Bank (IDB) is leading the structuring of the Caribbean Water Utility Insurance Collective Segregated Portfolio (CWUIC SP) to support disaster response and recovery. The IDB has worked closely with CCRIF SPC (formerly the Caribbean Catastrophe Risk Insurance Facility) and the UK Government to establish CWUIC as a segregated portfolio (SP) within CCRIF SPC together with Climate Investment Funds (CIF), Caribbean Development Bank (CDB) and The Coca Cola Foundation.
Caribbean countries are extremely vulnerable to natural disasters, and they experience disproportionate losses. These nations face similar challenges and climate change will worsen this situation, with more frequent droughts, floods and natural disasters. Total damages from a sample of disasters in the Caribbean between 2015 and 2019 amounted to US$92.5 billion. And these natural disasters, such as hurricanes, windstorms, drought, landslides, and flooding are expected to intensify and be more frequent because of climate change.
There is an urgent need to expand and rehabilitate water and sanitation infrastructure to reach those who are increasingly vulnerable to climate change impacts. Hence, utilities need more and better insurance to increase their resilience to natural disasters. Currently, insurance providers in the Caribbean cannot offer natural disaster insurance to Caribbean water and wastewater utilities on affordable terms. After an event, most utilities lack the budget to restore services quickly or to fund concerted efforts to improve their systems’ resilience. These utilities need a disaster risk financing facility to provide mutual aid, quick liquidity and prioritize loss reduction measures.
CWUIC SP will become a center of excellence for disaster risk management and financing. It is divided into three components: emergency response, parametric insurance, and resilience. Its establishment has been approved by CCRIF SPC’s Board and by the regulator, CIMA (Monetary, Regulatory and Advisory Body of the Cayman Islands). CCRIF already provides parametric insurance coverage to Caribbean and Central American sovereigns, the electric utilities, and fisheries. CWUIC SP will be the first-of-its-kind in CCRIF SPC and the other risk pools because it encompasses both disaster risk financing and management.
Approximately 35 water utilities in 29 territories in the Caribbean have been identified as potential clients for CWUIC SP, which intends to insure against drought, volcanic eruptions, landslide/mudslides, flood (runoff), windstorms, and tsunamis. The UK Government contributed US$5.6 million to help with technical support for shaping CWUIC SP and offering premium subsidies to water utilities in six official development assistance eligible Caribbean countries. Additionally, US$650,000 was provided by the CDB and US$739,000 by the CIF through IDB Invest.
Furthermore, The Coca-Cola Foundation provided a grant of US$500,000 for conducting feasibility studies on water utility projects that promote resilience. CCRIF SPC obtained a US$25 million investment from the UK Government to capitalize CWUIC SP, which will be used, in combination with reinsurance, to protect CWUIC SP against unexpected losses from policy claims. This US$25 million investment will be returnable after 20 years with no interest.
About the IDB
The Inter-American Development Bank is devoted to improving lives. Established in 1959, the IDB is a leading source of long-term financing for economic, social, and institutional development in Latin America and the Caribbean. The IDB also conducts cutting-edge research projects and provides policy advice, technical assistance, and training to public- and private-sector clients throughout the region. Take our virtual tour.
About the CDB
The Caribbean Development Bank is a regional financial institution established in 1970 for the purpose of contributing to the harmonious economic growth and development of its Borrowing Member Countries (BMCs). In addition to the 19 BMCs, CDB’s membership includes four regional, non-borrowing members (Brazil, Colombia, Mexico, and Venezuela) and five non-regional, non-borrowing members (Canada, China, Germany, Italy and the United Kingdom). CDB’s total assets as December 31, 2022, stood at US$3.46 billion (bn). These include US$2.06 bn of Ordinary Capital Resources and US$1.40 bn of Special Funds Resources. The Bank is rated Aa1 Stable by Moody’s, AA+ Stable by Standard & Poor’s and AA+ Stable by Fitch Ratings. Read more at caribank.org.
About The Coca-Cola Foundation
The Coca-Cola Foundation’s mission is to make a difference in communities around the world where The Coca-Cola Company operates and where our employees live and work. The foundation supports transformative ideas and institutions that address complex global challenges and that leave a measurable and lasting impact. The foundation´s giving is focused on sustainable access to safe water, climate resilience and disaster risk preparedness and response, circular economy, economic empowerment, and causes impacting our hometown community. Since its inception in 1984, The Coca-Cola Foundation has awarded grants of over US$1.5 billion in service of its mandate to strengthen communities across the world.
About UK Government and UK-Caribbean Development Partnership
The UK’s International Development Strategy places development at the heart of the UK’s foreign policy. It sets out a new approach to development, anchored in long-term partnerships tailored to the needs of the countries we work with, built on mutual accountability and transparency. This approach goes beyond aid and brings the combined power of the UK’s global economic, scientific, security and diplomatic strengths to our development partnerships. Our 4 priorities are to deliver honest, reliable investment, provide women and girls with the freedom they need to succeed, step up our life-saving humanitarian work, and take forward our work on climate change, nature and global health.