Vanuatu’s recent membership in the Pacific Catastrophe Risk Insurance Company (PCRIC) has proven advantageous as the country swiftly received a parametric sovereign insurance payout of $1.2 million (approximately F2.79 million) following an earthquake that struck Port Vila on December 17. This payout, encompassing the maximum amount permissible under the insurance policy, was delivered in less than two weeks after the disaster—a testament to PCRIC’s rapid-response capabilities.

During a ceremony in Port Vila, Prime Minister Charlot Salwai Tabimasmas and Finance Minister Johnny Rasou Koanapo were on hand to accept the cheque from PCRIC’s CEO, Aholotu Palu. While acknowledging that the payout is insufficient to cover all expenses related to the earthquake damages, Palu emphasized its critical role in providing immediate support during the aftermath of natural disasters.

This proactive initiative reflects Vanuatu’s commitment to enhancing disaster risk management, as the specialized disaster risk policy was crafted in collaboration with government representatives and only took effect on November 1, 2024. It allocates a significant portion—80 percent—of the premium toward cyclone risk, with the remainder devoted to coverage for earthquakes and tsunamis. Notably, the policy employs a people-centered payout trigger, focusing on the number of individuals affected rather than solely on damage to public infrastructure.

Palu highlighted the impressive return on investment, noting that the payout exceeds the government’s contribution to the earthquake component of the insurance policy by over 73 times. He encouraged the government for its foresight and efforts in disaster preparedness, stressing that such strategies are crucial in a region vulnerable to natural disasters.

PCRIC plays a vital role in fostering resilience among Pacific governments, ensuring timely financial assistance during crises. This achievement serves as a hopeful reminder that through strategic disaster risk management and cooperation, Pacific nations can better navigate the unpredictable challenges posed by climate change and natural disasters, ultimately building stronger, more resilient communities.

In summary, Vanuatu’s experience with the PCRIC payout illustrates the importance of preparedness, showcasing a promising step toward effective disaster recovery strategies in the Pacific.