The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

The former Christie administration ceased paying the annual $900,000 premium to the Caribbean Catastrophe Risk Insurance Facility (CCRIF) after it was advised that the likelihood of ever receiving a payout was “almost zero”.

Sources close to the former government yesterday pushed back hard against assertions by Prime Minister, Dr Hubert Minnis, that its decision had cost the Bahamas a $32 million payout from the facility that was set up to assist Caribbean nations with disaster recovery.

Michael Halkitis, former minister of state for finance, declined to comment on the issue yesterday, saying that Opposition leader, Philip Davis, was expected to address the issue at a press conference today.

But, following Hurricane Matthew’s passage last year, Mr Halkitis said the then-government had ceased the annual premium payments because the Bahamas would only have received compensation in the event of a Category Five hurricane.

Matthew came through the Bahamas as a Category Three/Four storm, and Mr Halkitis said the Christie administration had decided to drop CCRIF participation and establish its own disaster fund as “the threshold was just too high”.

A source familiar with the matter told Tribune Business yesterday, however, that the decision to discontinue paying CCRIF premiums was taken following advice to the Government from a local technical committee.

“We have been a part of this thing for 20 years, and could never get a claim,” they said. “Our information was that the likelihood of us getting a claim was almost zero.

“A committee had been put together comprised of persons from the Met Office, Ministry of Finance and other agencies. They submitted a report suggesting that the Government drop it.

“After Hurricane Matthew, the guys from the CCRIF commented on what would have happened if the Bahamas had kept it. That was taken with a grain of salt. It was almost impossible for us to have gotten anything.”

This, though, stands in sharp contrast to the May 31, 2017, letter from CCRIF’s chief executive, which said the Bahamas stood to have received a $32 million payout had it continued its membership.

The now-Opposition will now have to justify their decision, and explain why it - and the advice they received - differs so significantly from CCRIF’s position.

Dr Minnis told Parliament on Tuesday that the former administration’s action had resulted in the Bahamas losing out on a $32 million insurance payout, money that was much-needed in Hurrricane Matthew’s aftermath.

Mr Davis, in response, told Parliament: “My recollection on this issue was that advice was followed with respect to continuing that policy, and the reason for that was because of the archipelagic nature of our islands that losses were not dealt with in that fashion.

“If damages were in Long Island, then they took into account what the damages were on all of the islands to determine what the losses would be. The advice was given in respect to that and that is why the insurance was not continued.”

Dr Minnis, during his 2017-2018 Budget debate communication, read into the record portions of the letter he received from CCRIF’s chief executive.

Dr Minnis told Parliament: “He (the CEO) wrote: ‘We are pleased that the Bahamas has been a member of CCRIF since its inception in 2007. We are pleased that the Government purchased tropical cyclone (hurricane) policies every year between 2007 and 2014, and also purchased policies for both tropical cyclones and excess rainfall for the 2015-2016 policy year.

“However, we deeply regret that the Government decided not to renew its CCRIF policies for the 2016-2017 year, resulting in the Bahamas missing out on two CCRIF payouts from Tropical Cyclone Matthew.’”

Dr Minnis added: “I note that the annual policy for this insurance facility was approximately $900,000. I was shocked by what the CEO of the Caribbean Catastrophe Risk Insurance Facility went on to say in his letter.

“He stated: ‘Based on the registered losses, it means that had the Government of the Bahamas renewed its tropical cyclone policy for 2016-2017, using the previous year’s policy conditions, the policy would have triggered, resulting in a payout of approximately $31.8 million, equal to the coverage limit’.”

This would have been the single biggest payout, according to the Prime Minister, ever made by CCRIF to any country.

The Bahamas’ excess rainfall policy would also have been triggered, resulting in a payout of $855,874.Those payouts would have been larger depending on the coverage purchased, Dr Minnis said.

CCRIF made payouts totalling $29.204 million to its other four CCRIF member countries affected by Hurricane Matthew - Haiti, Barbados, Saint Lucia and St Vincent & the Grenadines - within 14 days of the event.