Vanuatu has effectively showcased its commitment to disaster risk management through its timely subscription to the Pacific Catastrophe Risk Insurance Company (PCRIC). Following the earthquake that struck Port Vila on December 17, the government received a significant parametric sovereign insurance payout of $1.2 million (approximately FJ$2.79 million). This payout, which represents the maximum allowable amount under the policy, was remarkable in its swift processing, completed in less than two weeks.

During a formal handover ceremony in Port Vila, PCRIC’s Chief Executive Officer, Aholotu Palu, presented the cheque to Prime Minister Charlot Salwai Tabimasmas and Finance Minister Johnny Rasou Koanapo. While acknowledging that the payout may not cover all the extensive damages caused by the earthquake, Palu emphasized its critical role as immediate support for governments in the aftermath of such disasters.

The insurance policy, which took effect just 16 days before the earthquake, was meticulously developed in consultation with Vanuatu’s government representatives. It cleverly allocates 80% of premiums towards cyclone risks, with the remaining 20% divided equally between earthquake and tsunami coverage. An innovative component of this policy is its people-centered payout trigger, which bases payouts on the estimated number of individuals affected by the disaster, rather than solely assessing damage to infrastructure.

Palu highlighted that the payout exceeded the government’s contribution to the earthquake portion of the policy by over 73 times, representing an impressive return on investment for Vanuatu’s proactive disaster preparedness initiatives.

PCRIC, headquartered in the Cook Islands, aims to bolster resilience among Pacific governments by assisting them in managing the financial repercussions of natural disasters. This recent experience serves as a hopeful testament to the benefits of strategic disaster risk management, underscoring the significance of timely financial support for countries confronted with the ongoing challenges posed by climate change.

In summary, Vanuatu’s rapid receipt of insurance payout exemplifies effective planning and response strategies within disaster recovery efforts. This not only instills optimism for the future but also encourages other Pacific nations to adopt similar proactive approaches to enhance community resilience in the face of increasing climate-related threats. Collaborative efforts and well-designed insurance frameworks are crucial for building stronger, more resilient communities across the region.