26 February 2018Analysis

Tonga receives record $3.5m payout from captive after Cyclone Gita

The government of the Pacific Island country Tonga has received a $3.5 million pay-out from the Pacific Catastrophe Risk Insurance Company (PCRIC) following Cyclone Gita, a Category 4 cyclone that struck the islands on February 12, 2018.

Funds were transferred after seven days of the cyclone event, providing the Tongan government with appropriate financing to support disaster-relief efforts and effective service delivery to the affected areas.

Tonga is one of five Pacific Island countries to purchase catastrophe risk insurance from PCRIC - a captive insurance company owned by the Pacific Catastrophe Risk Insurance Foundation that offers governments insurance cover against climate and seismic hazards, including tropical cyclones, earthquakes and tsunamis.

The captive's policies are designed to pay-out within 10 days of a triggered event to provide immediate access to liquidity for disaster response.

Gita reached its peak intensity as a Category 4 cyclone before making landfall on Tonga on February 12, where its destructive wind strength caused wide spread damage.

“Our thoughts and prayers go out to the affected communities across the Pacific, said PCRIC chief executive David Traill. “Despite the tragic circumstances, we are proud to have been able to provide rapid funding to the Tongan government seven days after Gita making landfall which will provide immediate support to help meet the needs of local communities.

“Cyclone Gita has reinforced the importance of a coordinated disaster management capability across the Pacific, and PCRIC stands as a critical support in ensuring governments can act quickly following disasters.

“It is clear that the increased level of coverage provided to Pacific Island countries through the establishment and capitalisation of PCRIC by our donor partners has made a positive impact on the support we are able to deliver to the Pacific Island region.

“We would like to acknowledge the generous capital contributions made by the governments of Germany, Japan, the United Kingdom and the United States of America who have made this result possible, and the World Bank for their role in supporting the overall PCRAFI Program.”