In a region increasingly battered by climate shocks, Caribbean leaders are turning to artificial intelligence to improve insurance coverage for the most vulnerable.

Speaking at the “AI and Human Development” panel at the Caribbean Regional Risk Conference last week in Barbados, Heather Timothy, regional programme co-ordinator for the Climate Risk Adaptation and Insurance in the Caribbean project, pointed out how AI-powered parametric insurance could be a game-changer for farmers, fisherfolk and informal workers in Bermuda and throughout the Caribbean.

Ms Timothy explained that AI can analyse vast amounts of data to design parametric products that trigger quick, automatic payouts after disasters. But gathering that data is crucial, she said.

“With more data and better data, we can reduce that whole basis risk element so where the model losses, the actual losses are closer, which again then brings trust in the system that you are actually getting a payout,” she said.

Since its launch in 2007, the Caribbean Catastrophe Risk Insurance Facility has had ties to Bermuda. Over the years, the CCRIF has expanded from its original hurricane and earthquake coverage to include excess rainfall, fisheries, utilities and loan portfolio protection. The island is both a member government and a donor through the facility’s multi-donor trust fund, helping to establish what became the world’s first regional catastrophe risk pool.

After Hurricane Dorian in 2019, the facility paid out more than $12 million to The Bahamas, while after Hurricane Beryl in 2024 it disbursed $84 million across several islands, including a record $55.6 million to Grenada.

“AI can help us understand one person's needs and target market needs, and how we can get the product out to them in a cost-effective manner,” Ms Timothy said. She emphasised that making insurance “affordable, appropriate, accessible, responsive and simple” is crucial for reaching those most at risk from hurricanes and floods.

But, she added: “We need many stakeholders to bring around this microinsurance product. We need regulators. We need insurance companies. We need community engagements and all these [central statistics offices] because the target markets that we have, they probably have a lack of trust in traditional insurance.”