Sister Islands insurance coverage

| 24/11/2008

I read with interest and disappointment that it is unlikely that the Sister Islands will benefit from the 16-member Caribbean Catastrophic Risk Insurance Facility (CCRIF), of which the Cayman Islands is a participant, to assist with the impact of hurricane Paloma.

Based on the reported statements from a representative of the CCRIF, it seems that the way in which the risk and payout model is structured the estimated damages would not trigger ”an automatic payout” from the CCRIF to assist the Sister Islands. This is because the policy is focused on the Cayman Islands as a whole and it is not estimated that there is “significant damage to economic activity or government infrastructure required for continuity of national administration”.

That may well be the case in terms of looking at the nation as a whole but it seems pointless that the Sister Islands, which is a separate and unique area of economic activity, has not been addressed by the policy’s parameters after the devastating effect of hurricane Paloma for a number of reasons:

The Sister Islands gross domestic product (GDP), which is the measure of the size of its economy, is likely no more than 50 million. I participated some years ago in what may be one of, the, if not the only, original measures of the Sister Islands GDP and at the time it was approximately 35 million and would have grown since then.

Approximately 50% of all economic activity in the Sister Islands is related directly or indirectly to the public sector. Therefore, even if the damage to public sector infrastructure is not large in absolute numbers, it is important to understand that the resulting impact of any damage to government infrastructure on the Sister Islands economy will still be very significant.

While there are no official estimates of the actual damage in the Sister Islands as yet, it is obvious that even if the financial damage ranged from the 15 to 20 million, as recently quoted by one government official, that this would amount to between 30 and 40% of the Sister Islands GDP. If that does not qualify as an economic disaster, then nothing else will.

For the purposes of an insurance facility aimed at dealing with economic risks, the Sister Islands should be treated differently to one of the other districts due to a number of implications owing to their unique geographical location.

The Cayman Islands suffers from a unique disparity between its official GDP and the “local reality” as far as the actual measurement of the domestic economy is concerned. Figures from the international business sector (offshore financial services) are included in the measure of what constitutes the country’s GDP. This figure is then divided by the total resident population to get the GDP per capita, which is the traditional proxy measure of the standard of living used by most countries and bodies like the World Bank and IMF. The Cayman Islands has one of the highest GDP per capita anywhere in the world, which now stands at around US$45,000. Because of this the country is often treated as it were better off than it really is in terms of access to resources. It therefore tends to fail to qualify for certain types of assistance as compared to other countries which are more obviously “developing countries”.

But we should not let that traditional issue impact our ability to draw on an insurance facility such as the CCRIF. If the parameters of the insurance policy really do not take into account the unique nature of the Sister Islands as an important and separate economic area of the Cayman Islands, then it would appear that the policy (or our participation in it) is seriously flawed. If this assumption is incorrect then hopefully the relevant authorities will be able to draw on the funds with urgency and the reported statements of the CCRIF, which suggest that assistance to the Sister Islands is unlikely, are incorrect.

 

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Category: Viewpoint

Comments (6)

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  1. Anonymous says:

    If we didn’t pay for a catastrophic insurance coverage then what did we pay for?

    I can’t wait for the FOI to come into effect as I really want to see a copy of that insurance policy and read it for myself.

    If the Government wanted to write a $2million dollar cheque so badly they could have written it to me:

    Mr. Take Your Money, George Town, Grand Cayman

    I could have used it to do much more than what that policy dictates.

    I suppose we are yet again burning $2million of our tax payers money.  Yes, Tax payers, we all pay taxes in this Tax Haven, with the exception of the rich who don’t

    SHAME SHAME SHAME……on the stupid moves we make. 

    Attn All you potential candidates in the 2009 Election, DO NOT ASK ME TO VOTE – I am not going to help again to put people in power who couldn’t give a hoot about the people or the country.

    …….FOR LOVE OF COUNTRY is the PPM Slogan, well here’s the new one you should use FOR LOVE OF FILLING MY POCKETS WITH MONEY AND STRIPPING THE COUNTRY DRY AND HITTING THE POOR PEOPLE UP FOR MORE TAXES.  That is my translation of the PPM Government Slogan  and as for the UDP….

    There’s was BETTER BALANCE…….her’s the new UDP Slogan "BETTER BALANCES IN OUR ELECTED OFFICIALS BANK ACCOUNTS"  that’s my translated version of theirs.

    BEWARE OF THE INDEPENDANTS THEY MAY BE PPM AND UDP CANDIDATES TRYING TO FOOL YOU…..

     

     

  2. Anonymous says:

    Once again we see the 100% incompetence of the PPM Government where they pay, what is it ??? 4 million dollars CI of tax payers money for this Insurance Policy and never took the time to send it to the Legal Department for the "legal fine print" to be reviewed at the bottom of the policy, to see if the Sister Islands would be covered in case of a Hurricane, such as Paloma did.

    This sounds so much like the 3 million dollars CI of tax payers money that the PPM Government gave to Stuart Kernohan for the Police Helicopter that can’t seem to fly over to the Sister Islands at night or even around Grand Cayman during "overcast skies"

    What more are we going to learn next ????  Will the next confirmed Police Commissioner of the RCIPS turn out to be a "Zoo Keeper from the UK" whose application got mixed up with the actual Commissioner’s application at the FCO in London ????? !!!!!!!!!!!! 

     

    • Anonymous says:

      Why does every issue have to be turned into a political issue? The PPM Govt. this and the PPM Govt. that whether or not they have been at fault. Yearning for the good old days of non-stop corruption, victimization, fear and intimidation, eh? 

  3. Anonymous says:

    The CCRIF does provide important and valuable protection for a national emergency.  As one of the previous posts said the damage on the Brac is not a national emergency, it is a regional one, and a small and relatively insignificant one at that when one considers small population or the tiny economic contribution of the Brac.  The writer of this article wants to undermine a good facility because it does not do something that it was never intended to do. 

    I don’t mean to sound cold, but the figures speak for themselves, and we are talking money and insurance reality here.  The bottom line is that GC can generate the funds to rebuild the Brac, which is why we don’t need recourse to the Facility.  The Brac could not do anything to rebuild GC. 

  4. Anonymous says:

    Very well reasoned and very true.

  5. Anonymous says:

    The CCRIF is insurance to protect nations in events of national disaster, not regions in the case of a regional disaster.  This terrible storm has affected an area where only about 3% of the residents of the Cayman Islands live.  It is a region whose economic significance is negligible, the fact that over 50% of the economy is linked to the public sector highlights this.  The rejection of any coverage under the CCRIF is absolutely correct – we did not pay for a regional insurance policy nor could the Cayman Islands afford one.