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(Press Release) GRENADA – Grenada Electric Services Company Limited (GRENLEC) has received an insurance payout of USD 9,323,275 (ECD 25.1 million) from CCRIF following the passage of Hurricane Beryl. In addition to causing damage to infrastructure, housing and ecosystems, Beryl also caused damage to Grenada’s electricity transmission and distribution systems, which are managed by GRENLEC. GRENLEC became a member of CCRF in 2023, when it purchased CCRIF’s parametric insurance product for electric utilities.
Launched in 2020, CCRIF’s Power Utility Parametric Insurance product limits the financial impact of devastating tropical cyclones by providing power utilities with liquidity quickly when the policy is triggered. The product covers direct damage to the transmission and distribution (T&D) components of the power system due to wind impacts.
The launch of this power utility insurance product enables CCRIF to expand coverage to non-sovereigns and the private sector. Mr. Isaac Anthony, CEO of CCRIF, said: “The close relationship between wind speed and damage to overhead transmission and distribution systems created an opportunity for CCRIF to develop this innovative power transmission and distribution system parametric insurance product, which could be priced more competitively in the market than traditional indemnity insurance. One of the issues facing power utilities in the Caribbean is the lack of access to traditional overhead transmission and distribution system indemnity insurance, as the supply of insurance is very limited and pricing is uneconomical due to the high risk.”
After receiving the payout, Mr. Clive Hosten, General Manager of GRENLEC, said: “GRENLEC is extremely grateful for the timely and vital financial payout from CCRIF Parametric Insurance. This funding has been vital in our efforts to restore and improve our electricity infrastructure following the recent Cyclone Beryl. The payout from CCRIF has enabled us to expedite repairs and ensure the restoration of essential services for the benefit of the community. We commend CCRIF for their efficient and expeditious processing of the claims process within 14 days as promised. Their professionalism and speed in disbursing the funds is commendable. The Company will also use these funds to build the necessary resilience into our network. Going forward, we are committed to strengthening our infrastructure in an effective manner to cope with future disasters. We are very proud to be the first power company in the region to receive payout from CCRIF.”
After a hurricane, utilities suffer high financial losses primarily due to damage to transmission and distribution systems, and residents typically bear most of the repair costs due to increased electricity bills.
The Irish Government provided CCRIF with a grant to develop the product, which was developed in close collaboration with the Caribbean Electric Utilities Services Company (CARILEC). CARILEC is the Caribbean association of electricity utilities, suppliers, manufacturers and other electricity industry stakeholders, whose 35 members are electricity utilities. At the launch of the product in 2020, Dr. Cletus Bertin, Executive Director of CARILEC, said: “Electricity plays a key role in the economic and social life of the region. This product is not only for the electricity utility sector. It is for the development of the economic and social life of the people of the region, who rely on tourism as well as agribusiness, light industry, etc., which all rely on a stable supply of electricity. This product speaks to a broader agenda: our ability to recover quickly after disasters and to create economic activity by providing electricity to the industrial and commercial sectors”.
Currently, there are three power companies in the Caribbean that have power company policies with CCRIF: GRENLEC, ANGLEC (Anguilla) and LUCELEC (St. Lucia). CCRIF is actively working with other power companies to develop the product for them. ANGLEC has been buying the product since its launch in 2020, building on the company’s experience with Hurricane Irma three years ago in 2017. In 2017, the utility was severely affected by Hurricane Irma, which destroyed almost all of its transmission and distribution network, costing the company more than EC$40 million (USD$15 million) to restore. At the time, the company had EC$16 million in its reserves, or self-insurance fund. After Irma, all of the reserves were used up. Today, as the frequency, intensity and unpredictability of climate-related events continue to increase, CCRIF’s CEO reminds utilities: “While disaster reserve funds and self-insurance are useful, a single major event could wipe out these reserves. Insurance, especially parametric insurance, should be considered a key component of a utility’s risk management and financial sustainability framework.”
CCRIF is currently in active discussions with several other power companies in the Caribbean to acquire this product. For more information on power products, please visit the CCRIF webpage:
https://www.ccrif.org/publications/booklet/ccrif-spc-electric-utilities-product
Following Hurricane Beryl, the Government of Grenada received a total of USD 44 million in Tropical Cyclone, Excess Rainfall and COAST (Fisheries) policy payments. In keeping with CCRIF’s value proposition, all payments were made within 14 days of the hurricane to allow the country to begin recovery efforts.
CCRIF currently offers six parametric insurance products, covering tropical cyclones, earthquakes, excessive rainfall, and the power and water utilities and fisheries sectors. CCRIF has 30 members: 19 Caribbean governments, 4 Central American governments, 3 power companies, 3 water companies and 1 tourist attraction.
Parametric insurance products are insurance contracts that pay out based on the intensity of events (e.g. hurricane wind speed, earthquake intensity, rainfall) and the amount of losses caused by these events calculated using pre-agreed models. As a result, payouts can be made very quickly – in the case of CCRIF, within 14 days of the disaster event. This is different from traditional or indemnity insurance, which requires an on-the-ground assessment of individual losses after the event before payouts can be made.
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