2018 March: The Pacific Catastrophe Risk Insurance Facility (the “Facility”) recently demonstrated its value and importance to the region when it paid out US$3.5m to Tonga as rapid response funding to assist with the recovery from destruction caused by Cyclone Gita.
The Facility was established pursuant to the Pacific Catastrophe Risk Insurance Facility Act 2016 (the “Act”), a Cook Islands statute. It is an initiative lead by the World Bank, with financial support from Japan, Germany, USA and the UK, to provide financial assistance to Pacific island nations affected by natural disasters.
The Act was passed by the Cook Islands government to provide a structure for the governance, management and administration of the Facility. That structure includes a Cook Islands foundation (managed by participating nations and development partners) owning a Cook Islands company, Pacific Catastrophe Risk Insurance Company (the “Company”). The Company is licensed under the Cook Islands Captive Insurance Act 2013 to undertake captive insurance business for the benefit of the Pacific island nations participating in the Facility. At present those nations are the Cook Islands, the Marshall Islands, Vanuatu, Samoa and Tonga.
When the World Bank, together with organisations including the ADB and the Forum Secretariat, decided to provide funding to assist Pacific nations affected by natural disasters, it sought assistance from the Cook Islands due to its established legal and regulatory framework, its responsiveness to passing laws necessary to establish and facilitate the Facility and due to it having more than 30 years of experience in providing administration, legal and insurance services.
It is envisaged that the Facility will play a vital role in increasing the region’s resilience to natural disasters. The recent payment to Tonga provides evidence of this. That payment should give comfort to participating nations that the Facility works, and encourage those considering participating to do so.