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an issue evident in the Pacific, but
globally. To avoid a surge of cap-in-
hand post-disaster aid dependency,
the global family of wealthy nations
must come to the table prepared to
support sustainable and affordable
solutions.
PARAMETRIC INSURANCE At the same time, PCRIC is exploring

options which allow it to leverage
– Addressing the Financial Impact of Disasters its unique knowledge and standing
across the Pacific in the CDRFI
The concurrent advent of tropical cyclones Rae, Seru and Alfred (R-L) demonstrates the space. This includes expanding
magnitude of the challenge faced by the Pacific Islands region. policy options for state owned utility
The Pacific Catastrophe Risk Insurance Company the event is calculated to have exceeded pre-
(PCRIC) is a special-purpose disaster risk defined thresholds for one or a selection of agreed Image Credit: NASA’s VIIRS NOAA-21 Satellite, Feb 26, 2025 service providers, and NGOs active
insurer created to provide a pathway for nations parameters. This approach provides clients with a commitment and several years of extreme effort in sectors such as tourism and agriculture, which
in the Pacific Islands region to secure financial pre-arranged solution customised to their specific to rebuild understanding and momentum in are critically important economic drivers across the
solutions to the costly impact of natural disasters. circumstances and tied to the scale of the impact, the market. Ultimately, this effort paid off with whole region. Equally, though we are among the
PCRIC traces its origins to a pilot insurance providing a greater degree of certainty even before sovereign policies now current in Cook Islands, youngest of regional organisations, we are actively
program launched by the World Bank in 2013 an event occurs. Additionally, with no assessment Fiji, Niue, Samoa, Tonga, and Vanuatu. In addition, exploring pathways for supporting nations of the
under the Pacific Catastrophe Risk Assessment necessary, payouts can generally be made within non-sovereign policies exist with a state-owned region to gain access to global funds established
and Financing Initiative (PCRAFI). As this pilot as little as 14 days of the event occurring. enterprise (SOE) in Papua New Guinea and a non- to address the impact of climate change.
program came to a close in 2015, there were government organisation (NGO) in Fiji. Overall,
calls from across the region for ongoing access PCRIC is one of four regional risk pools operating PCRIC’s 8 current policies cover 17 perils in 7 Elsewhere, we are aware that the knowledge and
to disaster risk financing options. Donors around the globe, which act to create market scale nations, with total coverage value of US$52.5M. capacity to make well-informed decisions regarding
responded positively and in 2016, PCRIC was that can be leveraged on behalf of vulnerable This represents dramatic growth for the company DRF needs to be greatly expanded and elevated
established in the Cook Islands. developing nations. PCRIC facilitates the pooling of throughout the region. We see a clear need for
disaster risk across its small island state members over earlier years. investment in the next generation of leaders who can
PCRIC exists exclusively for the benefit of Pacific and then presents this pool of risk as a single A major contributor to this outcome was the very confidently navigate the complexities of ensuring
Island nations. It was created to close the gaps market opportunity to global insurers, transferring positive response to work undertaken throughout the best possible levels of disaster risk protection
many island nations faced in securing readily financial risk away from the region and securing far 2024 to redesign our policy offering, enhancing for their nations. Our commitment in this regard is
accessible funds in the aftermath of a disaster, better pricing outcomes than are possible through transparency and ease of comprehension, with an reflected in our collaboration with the Global Shield
and to advance knowledge and understanding individual nations acting alone. The more nations emphasis on people and community impact rather Solutions Platform (GSSP) and University of the South
of methodologies and pathways for managing that join PCRIC, the larger the pool of risk and the than physical impact alone. Current products cover Pacific (USP) to establish vocational courses, with
the financial impact of natural disasters. PCRIC greater the collective benefit. Tropical Cyclone, Earthquake, Tsunami and Excess scholarships also mooted. Further, we co-host the
operates as a provider of disaster risk financing Rainfall. A drought product will be launched in key regional workshop on DRF on an annual basis to
(DRF) instruments and capacity building Strongly supported by donors for nearly a decade 2025, satisfying demand particularly from the ensure access to expertise from amongst the world’s
activities, specialising in parametric insurance. now, the development of PCRIC has not always region’s more northerly located nations. best in their field.
This form of insurance differs from traditional been an easy journey. In the early years, clients
insurance where the client is covered against could only choose products addressing the risks With as many as 14 nations, excluding territories, As a passionate advocate for the region, there is
the loss incurred (like fire or flood damage to an associated with Tropical Cyclones or Earthquakes. able to join PCRIC, there is clearly more work no end to the work that needs to be done to ensure
asset) subject to assessment. In comparison, As the market grappled with a very unfamiliar to be done. In this regard, affordability is a key each and every island nation has equitable access
PCRIC’s parametric solutions consider the product concept, policy uptake was constrained, consideration that requires a global solution. Many of to effective disaster risk finance. There is no single
probability of a loss-causing event occurring with only 3 or 4 nations buying policies on an the nations impacted by natural disaster are not only ‘silver bullet’ product or initiative available to address
(like a cyclone or earthquake) and provides annual basis. physically vulnerable but are financially vulnerable the need, but well-defined, pre-arranged insurance-
prompt payouts based on the modelled impact Nevertheless, effectiveness of the product was as well. Budgets are often already stretched, and based solutions remove uncertainty, undergird pre-
that will have effect on communities, livelihoods, validated by payouts totalling almost US$10M to bearing the full weight of policy premiums to secure emptive planning, and help facilitate a priority focus
and physical infrastructure. meaningful amounts of coverage is beyond reach on the critical tasks of recovery and rebuilding,
Tonga in response to the impact of TCs Ian, Gita, knowing essential funding is available. We are greatly
This means that instead of making a payout based and Harold, and US$1.9M to Vanuatu related to TC in most instances. For sovereign policies written encouraged by the support we have enjoyed over
in 2024 PCRIC secured donor support in the form
on physical assessment of the impact post-event, Pam. The advent of COVID severely constrained of premium financing, but this is by no means many years and are driven to serve the region well
payment against a PCRIC policy will occur if client engagement, and it took an unswerving guaranteed to continue indefinitely. This is not only into the future.