The Tonga government will receive a US$4.5 million (about $10.4M pa'anga)  insurance payout for destruction caused by Severe Tropical Cyclone Harold on April 9, under its cover with the Pacific Catastrophe Risk Insurance Company.

It is the largest pay-out to be made by the Pacific Catastrophe Risk Insurance Company (PCRICA) since it began offering Pacific Islands government insurance.

Balwyn Fa’otusia, the CEO for the Ministry of Finance told the PCRIC that the funds “will enhance our ability to respond to the needs of our communities impacted by Cyclone Harold and already dealing with the impacts of the CoViD-19 global pandemic.

“In these challenging times the value of these products has been shown in supporting our wider strategy to financing natural disaster responses.”

PCRIC is a regional catastrophe insurance platform that provides governments of Pacific Islands with parametric climate and seismic cover, focused on cyclones and earthquake risks.

PCRICA chaiman Sarah-Jane Wild said that they would assist the Tongan government with much needed financing to help meet the needs of  their communities in the wake of the cyclone.

“This event has reinforced the value of a comprehensive and diversified disaster risk financing approach in the region, and we believe that PCRICA stands as an important option in ensuring governments can access liquidity quickly to finance rehabilitiation and recovery efforts. It is clear that the level of coverage provided to Pacific Island countries through the support of PCRIC by our donor partners and reinsurance panel continues to have a positive impact in the Pacific Island region.”

The PCRICA stated that its ambition is to grow and follow a similar model to that of the Caribbean Catastrophe Risk Insurance Facility.

Tonga has had insurance cover since January 2013 with earlier insurance payouts made following Tropical Cyclone Ian in 2014 and Tropical Cyclone Gita in 2018.

“The Government of Tonga, with support from the World Bank through its Pacific Catastrophe Risk Assessment and Financing Initiative (PCRAFI) initiative, was able to purchase catastrophe risk insurance since 2013 that Tonga can now, very quickly, access urgently needed funds to further boost our disaster response efforts on the ground following the recent Tropical Cyclone Harold,” said Tonga’s Minister of Finance, Hon. Tevita Lavemaau.

Tropical Cyclone Harold reached its peak intensity as a Category 5 cyclone with its devastating impact felt by thousands as it moved through the Solomon Islands, Vanuatu, Fiji and Tonga. The cyclone passed within 100 kilometers of Tongatapu, Tonga’s main island, with significant storm surges coinciding with king tides, causing widespread damage to coastal areas and communities.