K&M Advisors was pleased to lead the Pre-conference workshop on CWUIC SP at the 2022 CWWA Conference in The Bahamas, where twelve Caribbean water utilities expressed their strong support for its establishment in the region. CWUIC SP, as a center of excellence for disaster risk finance and management, will support water utilities in the Caribbean in increasing their resilience to natural hazards. It will pool water utilities to create economies of scale with diversified geographic risk to cover natural hazard risk. As a segregated portfolio (SP) under CCRIF SPC, CWUIC SP will be a first-of-its-kind facility providing Caribbean water utilities with access to a formalized response program and emergency preparedness training, parametric insurance, and funding for investments in priority resilience projects. CWUIC SP is the direct response to the request from utilities in the region for support in managing their increased risk to natural hazards in the face of climate change.
Climate research projections for the Caribbean estimate that there will be a significant increase in the intensity and frequency of extreme weather events (for example, hurricanes, windstorms, tidal waves, and tropical depressions) in the twenty-first century that have the potential for substantial damage. Caribbean jurisdictions are among the most heavily exposed locations on earth to natural hazards. Infrastructure and services, including water utilities, in the Caribbean have suffered tremendous losses from disasters, and climate-induced events will exacerbate damages as Caribbean territories face the cumulative impact of multiple events.
In the wake of disasters, the recovery of water utilities in the Caribbean becomes critically important to safeguarding the health and to the economy. However, the insurance currently available to water utilities in the Caribbean to help them recover from natural hazards is often not affordable and typically provides insufficient cover. Currently, water utilities in the Caribbean face the following:
- Insurance premiums are expensive and low amounts of natural hazard coverage are currently available for water utilities from existing insurance providers
- Few utilities purchase insurance, effectively “self-insuring” for losses of this kind
- Forecasted intensity/severity of tropical cyclones and other events are likely to increase
- There are increasing costs to repair the damage.
While different levels of vulnerability across the jurisdictions exist, water utilities in the Caribbean are exposed to common natural hazards. CWUIC SP will benefit from economies of scale and provide insurance on improved terms versus what utilities could obtain individually on their own. Additionally, technical assistance support from CWUIC SP will support water utilities in the Caribbean in increasing their resilience to natural hazards.
CWUIC SP’s primary objective is to help utilities recover from natural hazards. To accomplish this, CWUIC SP will have three components. Together, these components will build the resiliency of the water utilities and the communities they serve. These three components are:
- Component 1: The CWUIC Response Program will provide support for preparedness planning and early recovery assistance among participating water utilities.
- Component 2: Parametric insurance will provide coverage against natural hazards and provide quick liquidity after a qualifying disaster event.
- Component 3: The CWUIC Resilience Program will facilitate access to funding from development banks and other financial institutions for priority resilience projects.