October 27, 2020

Bahamas opts out of regional insurance facility

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ccrif2By K. Quincy Parker Nassau Editor From Caribbean News Now

NASSAU, Bahamas — The Bahamas has opted out of the Caribbean Catastrophe Risk Insurance Facility (), and will instead put the $900,000 annual premium in the , beginning this year. The insurance facility has been around for nearly ten years, meaning that after paying $9 million in premiums, The Bahamas walks away from the fund with nary a dime in payout.

Opposition leader Dr Hubert Minnis raised the issue in the House of Assembly yesterday, demanding answers on the relationship between The Bahamas and the insurance facility, and the status of payment of premiums. In response to Minnis’ probing, the administration revealed that The Bahamas has stopped paying premiums to CCRIF. That facility was founded in 2007 and has since made 21 payouts for hurricanes, earthquakes and excess rainfall to 10 member governments totalling approximately US$38.8 million. The Bahamas, a member since the founding along with the other Caribbean Community (CARICOM) states, has never had a payout.

Millions

In fact, while that facility has announced millions in payouts to countries affected by Hurricane Matthew, The Bahamas is absent from the list yet again. State Minister for Finance Michael Halkitis explained that a category five storm would have to hit New Providence directly before The Bahamas would get a payout.

The CCRIF announced last week that payouts to Haiti from CCRIF will total US$23.4 million, and that was due a total payment of US$1.7 million as a result of Matthew. In fact, payouts will be made to Haiti, Barbados, Saint Lucia and St Vincent and the Grenadines as a result of the heavy rains from Hurricane Matthew. These payments would be made through tropical cyclone and excess rainfall policies — two of the types of insurance facility available under the CCRIF.

Fund

Halkitis told Guardian Business that the premium, $900,000, will be put into the Disaster Relief Fund, where it will be allowed to accumulate. In fact, the 2016 premium is already in the fund, he said.

“What we will do is each year put that premium in the Disaster Relief Fund. We have already put this year’s premium in … Just the premium is in the account. We may decide to increase the annual amount put in,” he said.

Disqualified

Meanwhile, Prime Minister Perry Christie spoke to the House of Assembly on Thursday about what he called the contradictions in the program, since, for example, Barbados qualifies for a payout as noted above, but The Bahamas does not.

“… That we have a Category 4 impact on islands that are extraordinarily vulnerable and they disqualify us in that regard. It was that thinking that led to The Bahamas deciding that it would rather insure itself by making contributions to a fund,” Christie said.

The prime minister also noted the high per capita income in The Bahamas continues to disqualify the country from accessing concessionary lending and funding.

Backdrop

Minister for the Environment Ken Dorsett reported that, in the wake of Joaquin, Christie had led a delegation to Paris. He said at that time there was an issue of any claim that we could have recognized by CCRIF. According to Dorsett, Christie was as “very disturbed at the response to our claims then,” and met with the president of the Inter-American Development Bank — a creditor to CCRIF — as well as the head of CCRIF in Paris. That meeting led the officials to visit The Bahamas in early 2016.

“The prime minister himself went to great lengths to understand why, notwithstanding that we have been paying our premium for so many years, The Bahamas still remains unable to access it, and unfortunately it appears that unless a cat five hits New Providence we would not be able to claim anything. And so, great deliberation was undertaken to determine what was best for us as a nation, and as a result the Ministry of Finance took certain steps.

“It’s misguiding the Bahamian people to believe that we did not pay our premiums. As a matter of fact we are one of the few countries in the region who have maintained and consistently paid our commitment under the CCRIF,” Dorsett said.

Accountable

Also in the House on Thursday, Christie said the level of accountability with respect to the $150 million the government seeks to raise for hurricane relief would be that of the budgetary process.

“A line item will be created with $150 million, and go from year to year with the expenditure. But we will have to account. The Financial and Administration and Audit Act will be applicable, therefore the auditor general will have access to it, and we will be responsible in our obligation to Parliament, in being able to administer this on the levels of accountability that are constitutionally vested in us,” he said.

For more on this story go to: http://www.caribbeannewsnow.com/headline-Bahamas-opts-out-of-regional-insurance-facility-32255.html

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