Fiji is highly vulnerable to tropical cyclones, floods and other climate-related disasters which cause extensive damage to our infrastructure, affect livelihoods and impose substantial financial bearing on the Government’s balance sheet almost every year.
This was highlighted by Deputy Prime Minister and Minister for Finance Professor Biman Prasad after signing the commitment letter for Fiji’s Parametric Insurance Product with Pacific Catastrophe Risk Insurance Company (PCRIC) in Marrakech, Morocco. Professor Prasad signed the commitment letter with the Chair of the PCRIC Board Sarah-Jane Wild.
The Deputy PM thanked PCRIC for coming up with this risk-attuned, tailor-made product, the first of its kind for Fiji.
He says this product is very timely in the context of Fiji as we approach the cyclone season.
He adds that the reality is that the government now must fork out more money from their coffers towards responding in times of emergencies, building climate-resilient infrastructure and relocating of population affected by rising sea levels and loss of arable lands.
Professor Prasad says Fiji especially recently have been trying to expand its options and has taken up a concessional standby loan from JICA with disbursement contingent upon the declaration of a state of disaster. He says the government has also added the World Bank Catastrophic
Drawdown Option (CAT DDO) to their disaster risk financing bucket to assist with quick disbursement after natural disasters.
Professor Prasad says that after signing the commitment, the Fiji government is adding tools to their disaster risk financing through the first-ever sovereign parametric insurance to cover both cyclones and rainfall.
He says under the Cat-in-a-Circle product, the government is eligible to receive a payout for cyclones Category 3 and above affecting the coverage area in Fiji.
He further says the coverage areas are the coastline of Viti Levu and Vanua Levu, each with a 40km buffer into the surrounding sea and the coastline of the Yasawas and Kadavu, each with a 15km buffer into the surrounding sea.
Professor Prasad says the potential coverage limit available for the ‘Cat-in-a-Circle’ policy structure is dependent on the transfer of the risk to an international reinsurer but is targeted to be in the range of US$9m - US$10.5m for a total premium of US$1.5m.
He says that by committing to the sovereign parametric insurance covers, Fiji aims to achieve its objective of assisting natural calamities, building resilience and strengthening the sovereign balance sheet from disaster risks.
He has also reassured that the Government is making genuine and meaningful efforts to safeguard all Fijians as we advance in our development journey amid climate crisis.
Meanwhile, Sarah-Jane Wild thanked the Fiji Government for the signing of the commitment letter and highlighted the advantages of PCRIC’s pooled-risk approach to disaster risk insurance, and a collaborative approach to the financial challenges confronting nations in the wake of a major disaster can serve to deliver better outcomes for all in their most pressing time of need.
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