TIMELY subscription by Vanuatu to the Pacific region’s disaster risk insurer, the Pacific Catastrophe Risk Insurance Company (PCRIC), has seen the quick disbursement of $US1.2million ($F2.79m) parametric sovereign insurance payout for the earthquake that impacted Port Vila on December 17.
PCRIC’s chief executive officer Aholotu Palu met this week in Port Vila with Vanuatu’s Prime Minister Charlot Salwai Tabimasmas and Finance Minister Johnny Rasou Koanapo together with ministerial director generals for the ceremonial handover of a cheque for $US1.2m.
“This represents the maximum payout due under terms of the policy and has been received by the government less than 14 days out from the incident,” PCRIC said in a statement.
Mr Palu said rapid response was a key feature of the parametric policies offered by PCRIC, and while not designed to cover all costs associated with disasters, they quickly provide a measure of support to governments in the immediate aftermath of an event when they need it most.
“The Council of Members representing PCRIC’s global donors and active client nations within the region were pleased to see the payout mechanism operate as intended when put to the test,” Mr Palu said.
He said though the scale of the payout was dramatically overshadowed by the scale of the physical and financial devastation experienced, it represented a payout over 73 times the Government’s contribution to the earthquake component of the policy – an outcome for which the government should be applauded.
“The unpredictable nature of natural disasters makes it virtually impossible to be perfectly prepared for the next event, but the national government has made every effort within its means to be better prepared, and this payout is tangible evidence of their astute planning and foresight,” he said.
Designed in close consultation with senior government representatives, Vanuatu’s specialised disaster risk policy had only come into effect on November 1, 2024, with the objective of helping offset some of the most immediate financial costs arising from the impacts of cyclone, earthquake, and tsunami events.
With Vanuatu experiencing a high incidence of damaging cyclones, the government had requested that its contribution to the premium be allocated 80 percent towards cyclone risk, and 10per cent each to earthquake and tsunami.
Another feature of the policy was the people-centred payout trigger, which was based upon the estimated number of people impacted by an event, rather than the degree of damage to public assets.
“The payout made reflects the characteristics of Vanuatu’s customised policy with its relatively low coverage limit given the modest premium allocation towards the earthquake component,” Mr Palu said.
Based in the Cook Islands, PCRIC is an insurance provider for governments in the Pacific and is owned by Pacific Island nations through the Pacific Catastrophe Risk Insurance Foundation (PCRIF).
NOTE: This article was first published in the print edition of the Fiji Times dated January 01, 2025.
