Nicaragua Received Big Insurance Payout for Hurricane Damage
The insurance payout after Hurricane Otto was for over US $1.1 million. The executive branch also received another half-million dollars for the June 2016 earthquake.
By Maynor Salazar (Confidencial)
HAVANA TIMES – Comandante Daniel Ortega’s government successfully filed an insurance claim for the quantity of US$1,110,193 on a policy against catastrophic events, following the direct impact of Hurricane Otto on the country last year. The compensation was awarded by the Caribbean Catastrophe Risk Insurance Facility and the Segregated Portfolio Company (CCRIF SPC) last December 9, just 14 days after the hurricane’s passing.
According to the information posted on the CCRIF’s website, the payout represents compensation on the policy against tropical storms that the government acquired in 2015. According to the same source, Nicaragua received a prior award of US $500,000 due to the magnitude 6.1 earthquake that occurred on June 9, 2016, affecting Chinandega and other Pacific coast departments.
Even though the hurricane payout was received 14 days after the storm, nearly a month and a half has gone by, and help for those affected has still not arrived at the zone where the hurricane passed with the most force.
The Rama-Kriol Territorial Government issued a communiqué regarding the CCRIF payout in which they assure that they have no information regarding how the funds acquired will be utilized in the communities that suffered the greatest damage from Otto: Greytown, Indian River and Corn River,
“We demand that the government of Nicaragua immediately include us in the process of planning for the use of this compensation, and that they subsequently respond to our communities in an efficient and transparent manner, in coordination with our local executive board,” the communiqué states.
The Territorial Government declared that the emergency situation in the affected communities requires immediate assistance in the form of provisions, seeds for cultivation and reconstruction of homes.
The CCRIF was developed under the technical leadership of the World Bank and with a subsidy from the Japanese Government. Capital came from contributions to a Multi-Donor Trust Fund (MDTF) by the Government of Canada, the European Union, the World Bank, the governments of the United Kingdom and France, the Caribbean Development Bank and the governments of Ireland and Bermuda, as well as through membership fees paid by participating governments.
The Central America Segregated Portfolio is capitalized by contributions to a special MDTF by the World Bank, European Commission and the governments of Canada and the United States.
No accountability on the funds
Confidencial contacted the CCRIF office to obtain more information on the mechanism for delivery of the money, and whether there was any document that would obligate the Nicaraguan government to verify that the funds were used to supply aid for the citizens affected by Otto and by last year’s earthquake.
The CCRIF office responded that the payout is realized through the Ministry of Finance and Public Credit; nonetheless, it’s not stipulated what the beneficiary countries can and can’t do with the money.
“The institution asks the governments to provide information on how the payouts have been utilized and the activities that the funds have supported,” the CCRIF said.
When Confidencial continued to request the documentation that CCRIF demands of the beneficiary countries, the organization responded: “Although the CCRIF from time to time publishes information on the use of payouts, we’re not in position to publish this information on the 2016 payouts. We respectfully suggest that you contact the Finance Ministry to request information on the use of the payouts, in order to obtain this information first-hand,” was their response.
Confidencial also contacted the Public Relations Office of the Finance and Public Credit Ministry. Nevertheless, they stated that we should e-mail the Public Information Office requesting said information. At the time of publication for this post, that office hadn’t responded.
Confidencial persisted, contacting Niels Holm-Nielsen, specialist and Chief Manager of Disaster Risks and Regional World Bank Coordinator for Latin America and the Caribbean, about the government’s request for payout of the disaster insurance following the hurricane’s passage. Their response was a copy of a newsletter (the same one that’s on the CCRIF webpage) and a “thank you” for our interest in obtaining the information. They added: “if you have any additional questions regarding the role of the World Bank in capacity-building for financing Disaster Risks and support for the implementation of insurance policies, don’t hesitate to contact us to send you complementary information.”
CCRIF is registered in the Caiman Islands and operates as a virtual organization with support from a network of service providers that cover the areas of risk management, risk modeling, captive management, reinsurance brokerage, asset management, technical assistance, corporate communications and information technology.
A document from the institution explains that the countries acquiring this insurance policy receive rapid compensation, offering them immediate liquid resources at the most critical moment with no restrictions on said funds.
In other words, although the Nicaraguan government may have received more than US $1.6 million dollars for the payout they requested following the earthquake and passing of Hurricane Otto, neither the World Bank nor the CCRIF, nor any other donor is under an obligation to demand clear accounts from the State.
In the same document, the CCRIF justifies this point with the idea that such flexibility allows beneficiaries to implement actions in response to the emergency with greater efficiency, compared with the actions they would have carried out without such compensation, or if this response had caused them to enter into short-term public debt.