Vanuatu receives $1.2m payout from PCRIC following December earthquake

The government of Vanuatu has received its first payout of $1.2 million from the Pacific Catastrophe Risk Insurance Company (PCRIC) following the earthquake impacting Port Vila on December 17th, 2024.

The specialised disaster risk policy, which became effective on November 1st, 2024, was designed in close consultation with senior government representatives to help offset some of the most immediate financial costs arising from the impacts of cyclones, earthquakes, and tsunamis.

Vanuatu experiences a high incidence of damaging cyclones, prompting the government to request that 80% of its premium contribution be allocated toward cyclone risk, with the remaining 20% split equally between earthquake and tsunami risks.

The policy features a people-centred payout trigger, based on the estimated number of people impacted by an event rather than the degree of damage to public assets.

The payout reflects the characteristics of Vanuatu’s customised policy, which includes a relatively low coverage limit due to the modest premium allocation for the earthquake component.

With the loss calculation process under the policy now complete, Aholotu Palu, Chief Executive Officer of PCRIC, met with Prime Minister Hon. Charlot Salwai Tabimasmas and Finance Minister Hon. Johnny Rasou Koanapo, along with ministerial Director Generals, for the ceremonial handover of a cheque.

This represents the maximum payout due under the policy, which the government received in less than 14 days from the incident.

The government also explained that this payout demonstrated how timely and well-considered the recent decision to purchase a multi-hazard insurance policy from the region’s disaster risk insurer PCRIC was.

Palu highlighted that this rapid response is a key feature of the parametric policies offered by PCRIC, although not designed to cover all costs associated with disasters, they quickly provide a measure of support to governments in the immediate aftermath of an event when they need it most.

He added, “The Council of Members representing PCRIC’s global donors and active client nations within the region were pleased to see the payout mechanism operate as intended when put to the test.”

Prime Minister Tabimasmas expressed his thanks generously for PCRIC’s messages of condolence in the immediate aftermath of the earthquake and praised the haste with which the firm acted to ensure the government has access to liquid funds to immediately contribute to acute relief expenditures.

Palu commented, “Though the scale of the payout was dramatically overshadowed by the scale of the physical and financial devastation experienced, it did represent a payout over 73 times the Government’s contribution to the earthquake component of the policy – an outcome for which the government should be applauded.

“The unpredictable nature of natural disasters makes it virtually impossible to be perfectly prepared for the next event, but the national government has made every effort within its means to be better prepared, and this payout is tangible evidence of their astute planning and foresight,” he concluded.

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