The Deputy Prime Minister and Minister of Finance, Professor Biman Prasad, and Sarah-Jane Wild, Chairman of the Pacific Catastrophe Risk Insurance Company (PCRIC), have signed a letter of commitment for Fiji’s parametric insurance product.
The signing took place yesterday in Marrakech, Morocco.
Professor Prasad expressed his appreciation for PCRIC’s innovative approach to designing a tailored, risk-focused product, which is a first for Fiji.
With the cyclone season approaching, this insurance product comes at a critical time.
He noted that Fiji is vulnerable to tropical cyclones, floods and climate-related disasters, with recurring infrastructure damage, disruption of livelihoods and significant financial strain on the government budget.
It has highlighted the urgent need to increase government funding for emergency response, climate-resilient infrastructure and resettlement of people affected by rising sea levels and loss of arable land.
In a strategic move to strengthen disaster risk financing, Fiji is introducing its first sovereign parametric insurance product, the Cat-in-a-Circle product.
This insurance covers category 3 and above cyclones within specified coastal areas, including Viti Levu, Vanua Levu, Yasawa’s and Kadavu.
The potential coverage limit of between US$9 million and US$10.5 million is subject to the involvement of an international reinsurer, with a total premium of US$1.5 million.
The Deputy Prime Minister has emphasised that Fiji’s commitment to sovereign parametric insurance is in line with its objectives of assisting citizens following natural disasters, building resilience and ensuring the country’s financial stability in the face of catastrophe risks.
Fiji has been actively diversifying its disaster risk financing options, recently securing a concessional standby loan from the Japan International Cooperation Agency (JICA) tied to disaster declarations.
The government has also integrated the World Bank’s Catastrophic Drawdown Option (CAT DDO) into its disaster risk financing toolkit, ensuring rapid disbursement following natural disasters.
