He said, however, that he was not in favour of the establishment of a regional insurance fund to assist countries in the region affected by disasters.

"It is argued that this (regional insurance pool) would result in greater premium retention, increase in the capital base of regional insurers, expanded market capacity, reduce premium and hence wider insurance coverage. but I cannot avoid but being skeptical," Golding said. "I am not convinced that a regional insurance fund would be able to offer rates more attractive than those from external reinsurers which pool ours with worldwide risks."

He added that if such a fund were set up, there would still have to be significant reliance on external re-insurers because a single major disaster would impact severely on the regional pool.

He argued, however, that the proposed Caribbean Catastrophe Risk Insurance facility would allow governments to pool their risks and benefit from economies of scale in accessing the international reinsurance market.

"It (the facility) would be governed by parametric triggers based on the measured intensity of a pre-defined disaster rather than the traditional form of indemnity which requires time consuming evaluation of losses, and this would provide governments with immediate cash to respond to the effects of a disaster," said Golding.

The opposition leader was speaking yesterday at the 26th annual Caribbean Insurance Conference at Ritz Carlton Hotel in Montego Bay, which is being staged under the theme "Oh Katrina - We must survive".

The Caribbean Catastrophe Insurance Risk Initiative was proposed because of the concerns among Caricom governments about the increasing difficulty in gaining access to affordable and effective re-insurance coverage because of the high risk of hurricane damage in the region.

A feasibility study of the project, expected to cost Jamaica and the rest of the Caribbean US$100 million to set up is now underway in the region.

. process claims based on the measurement of the intensity of a predefined natural event in a predefined area over a predefined period, and limited to a predetermined sum per year.

This approach makes it less expensive than traditional insurance since it does not require that the insurer to evaluate losses on an indemnity basis.

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