No Caribbean insurance payouts from Hurricane Irene

Reuters News
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Posted: Aug 26, 2011 4:34 PM
No Caribbean insurance payouts from Hurricane Irene

LONDON, Aug 26 - Hurricane Irene will not trigger insurance payouts to the Caribbean islands impacted by the storm, which roared through the Bahamas as a major category 3 hurricane on Thursday.

The Caribbean's sovereign risk pooling facility, the Caribbean Catastrophe Risk Insurance Facility (CCRIF), said on Friday its preliminary model calculations suggest that no payouts will be due.

"We see government losses in six of our member countries but all are below the trigger level," Simon Young, chief executive of Caribbean Risk Managers, the facility supervisor of CCRIF, told Reuters. "The Bahamas endured the largest modeled loss but the absence of major impacts in Nassau and Freeport, where most exposure is, meant that the loss was below the trigger level."

Irene battered the low-lying Bahamas southeast of Florida and is expected to sweep northward to hit the North Carolina coast on Saturday, before raking the remaining Atlantic seaboard.

Flooding from Irene killed at least one person in Puerto Rico and two in the Dominican Republic. The storm knocked out power in the Bahamian capital, Nassau, and blocked roads with trees.

Insured losses in the Caribbean from Hurricane Irene will be between $500 million and $1.1 billion, risk assessor firm Air Worldwide said on Friday, adding that the Bahamas will account for more than 60 percent of the loss.

The CCRIF's hurricane policy is specifically geared to wind and storm surge losses. Impacts from rain and inland flooding are not included, which can be a significant difference from industry loss estimates, said Young.

"Given that the Bahamian government is making it clear that the tourism sector is open for business, we don't see a major immediate loss of revenue to the government, which is what the CCRIF policy is designed to cover. However, we do recognize that significant damage has been done in some of the smaller islands, and CCRIF has already contacted the government to see what other ways we may be able to assist," he said.

CCRIF was launched with the support of the World Bank and other donors, and has paid $32.2 million in insurance losses from 2007-2010 to some of its 16 member countries, including $8 million to Haiti after the country's devastating earthquake in January 2010.

Meanwhile, the U.S. eastern seaboard is preparing for Hurricane Irene, as forecasters predict Irene will make its first U.S. landfall in North Carolina on Saturday.

Forecasters expect the menacing broad hurricane to rake up the densely populated U.S. East Coast starting on Saturday, extending on Sunday to New York, America's most populous city with more than 8 million residents, and beyond.