Disaster Risk Policy Benefits Vanuatu

As a consequence of the national government’s foresight and  commitment to improved disaster preparedness and resilience for Vanuatu, the earthquake impacting Port Vila on 17 December stands as a solemn demonstration of how timely and well- considered was the recent decision the purchase of a multi-hazard insurance policy from the region’s disaster risk insurer, the Pacific Catastrophe Risk Insurance Company (PCRIC).

In the wake of the event, with the process of calculating the loss under the terms of the policy now complete, PCRIC CEO, Mr. Aholotu Palu, was proud to meet in Port Vila with the Prime Minister Hon. Charlot Salwai Tabimasmas and Finance Minister Hon. Johnny Rasou Koanapo together with ministerial Director Generals for the ceremonial handover of a cheque for US$1.2M. 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.

Mr. Palu indicated that this rapid response is 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. He added that 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.

Prime Minister Tabimasmas was generous in his expression of thanks and gratitude for PCRIC’s messages of condolence in the immediate aftermath of the earthquake, and praised the haste with which the Company acted to ensure the government has access to liquid funds to immediately contribute to acute relief expenditures.

The PCRIC CEO went on to state that though the scale of the payout was dramatically overshadowed by the scale of the physical and financial devastation experienced, it did represent 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, the specialised disaster risk policy came into effect 1^st November with the objective of helping offset some of the most immediate financial costs arising from the impact of cyclone, earthquake, and tsunami events. With Vanuatu experiencing a high incidence of damaging cyclones, the government requested that its contribution to the premium be allocated 80% towards cyclone risk, and 10% each to earthquake and tsunami.

Another feature of the policy is the people-centred payout trigger, which is 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.

The PCRIC Board and Team will continue to stand in support of the nation of Vanuatu and the people, businesses and public institutions now confronted with a very challenging period of recovery and rebuilding.