Cyclone Ian Triggers First Pacific Catastrophe Risk Insurance Payout

Cyclone Ian triggered the first PCRI payout.

Welcome back to the L&W Investigations liability and insurance news blog. Sure to affect the insurance and liability industry, Cyclone Ian triggered the first Pacific Catastrophe Risk Insurance Payout.

The Pacific Catastrophe Risk Insurance Payout is part of the Pacific Risk Financing and Insurance program (DRFI). The DRFI was designed to help Pacific island countries remain financially stable following natural disasters and includes coverage for damage from tsunamis, earthquakes, and typhoons (cyclones). The program, launched in January 2013, was put to the test for the first time last week when Tonga Ha’apai island group was hit with a category 5 cyclone.

Reports show that Cyclone Ian has displaced thousands, destroyed crops, damaged 75 percent of buildings, and even caused one casualty. Under the Pacific Catastrophe Risk Insurance Pilot, operated by the World Bank, Tonga Ha’apai will receive a $1.27 million payment from the United States that will go toward recovery.

Hn. Dr. ‘Aisake Valu Eke, Minister for Finance and National Planning in Tonga, stated:

the cash received from the catastrophe risk insurance pilot makes an important financial contribution for carrying out the government strategy for mitigating natural disasters, to ensure that response efforts to help the people of Ha’apai recover and their normal everyday lives can continue without interruption or delay.

There are six Pacific island countries participating in the Pacific Catastrophe Risk Insurance Pilot, as well as the Marshall Islands, the Cook Islands, Solomon Islands, Vanuatu, and Samoa. Payouts for damages are based on ‘parametric triggers,’ calculated by a computer model. The model estimates the damages sustained based on several factors, such as the magnitude of an earthquake or the intensity of a cyclone. As the Pacific islands experience frequent natural disasters, disaster insurance coverage is important in order to meet urgent needs and quickly repair and rebuild.


Learn more in The World Bank's press release: http://www.worldbank.org/en/news/press-release/2014/01/23/tonga-to-receive-payout-for-cyclone-response

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Critics Say Spill Highlights Lax WV Regulations

Who's really responsible for the recent spill in West Virginia?

Welcome to the L&W Investigations insurance and liability news blog, where each week we will take a closer look at major stories impacting the insurance and liability industry.  This week, a chemical spill into a river in West Virginia is making headlines, with some questioning whether poor decisions about environmental regulations are to blame for the disastrous spill.
West Virginia has a worrisome track record when it comes to regulating coal and chemical companies. Last week, a chemical spill highlighted WV’s lax regulations, as the site of the spill hadn’t been inspected since 1991. Other states require inspections of chemical storage facilities while WV only mandates inspections of production facilities. The spill into Elk River left more than 300,000 without clean water and 169 people have been treated for chemical exposure. Officials are still conducting tests, but luckily, very few traces of contamination were found in the water this past Sunday.
An investigation has begun into the company responsible for the spill, but critics argue that Freedom Industries should not be held solely responsible when the entire system needs reform.  Angela Rosser, executive director of West Virginia Rivers Coalition tells The New York Times that we need to “value our natural resources over industry interests.”

After an explosion in 2008 left two workers dead at the Bayer CropScience Plant in WV, a team from the Unites States Chemical Safety Board encouraged the state to implement a new program to prevent similar incidents. Unfortunately, it never happened. An investigation by The New York Times in 2009 also found that pollution laws were being violated across WV, without paying fines or making necessary adjustments. Interviewee Jennifer Sass claims that “West Virginia has a pattern of resisting federal oversight and what they consider E.P.A. interference, and it really puts workers and the population at risk.” It is likely that such a program will be revisited after the recent spill. In the meantime, the insurance industry will be left to debate who is at fault as claims from affected residents begin pouring in.

For more news on the insurance and liability industry, view our new independent news site here: http://www.lwinvestigations.org

Learn more about this site in our recent press release.