Speaker sees increasing role for PPPs
An Insurance Day Summit Bermuda panel discussion on the future of catastrophe risk insurance yesterday looked at Public Private Partnerships (PPP) as one alternative method of providing insurance.
Milo Pearson, who is the chairman of Caribbean Catastrophe Risk Insurance Facility (CCRIF) and who was a speaker in the panel discussion on the topic, explained that one of the first PPPs providing insurance coverage was the California Earthquake Authority, an organisation which is publicly managed. "It seems to have worked quite well too," said Mr Pearson.
"The CCRIF is a different animal,” he explained. “It is a PPP — the funds for the creation of the risk facility were funded by donor countries, a combination of government members and donors, but on a day-to-day basis it's run by contract folks such as myself.
"You'll see more (of these) as the years go on,” he said, explaining that the private industries often do need the support of the public sector, while Governments don’t have the necessary long-term view. “A PPP can ensure the focus is on long term implications rather than the here and now."
He answered a question posed by a fellow panellist on how a government would create a greater demand for the production of reinsurance, rather than just providing the structure when a catastrophic event occurs.
Mr Pearson explained the point of the PPS is to provide short term liquidity in the event of a catastrophe.
He went on to say that he would like to see more focus in the Caribbean region on climate change. "We want governments to give someone a position at Cabinet level to deal with it 24/7," he said.
However, he compared the process to "herding cats”.
"One of the things we have done — studies in respect of climate change — we wanted to focus on what would be the long term cost to individual governments of climate change over 30 years, and then sit down with them on that.”