PCRIC seeks additional funding as risk pool grows to $52.75mn in limit

By Henry Gale

Jan 29 - (The Insurer) - The Pacific Catastrophe Risk Insurance Company (PCRIC) has highlighted the need for further financial support as demand for its products and services grows.

• PCRIC's risk pool grew significantly in 2024 as more countries and non-sovereign entities purchased cover

• Hannover Re joined PCRIC's larger reinsurance program, with reinsurance premiums totalling $3.25mn

• PCRIC leadership describe "acute" need for long-term funding to meet demand

• Drought product expected to be launched during 2025

The total coverage provided by PCRIC increased from $33.66mn in the 2023 policy year to $52.75mn at its November renewals, the regional catastrophe risk pool revealed in its 2024 annual report.

This includes $5.45mn for non-sovereign entities PNG DataCo, covering earthquake risk to undersea cables around Papua New Guinea, and the Vatuvara Foundation, insuring coral reef systems to Fiji's east.

The government of Vanuatu also rejoined the risk pool at those renewals, as PCRIC worked with WTW to redesign its policy structures with model vendors Reask, JBA Risk Management and Temblor.

Vanuatu subsequently received a payout of $1.2mn, its full limit for earthquakes, after a 7.3 magnitude quake struck the country's capital on 17 December.

PCRIC currently covers tropical cyclone, earthquake, excess rainfall and tsunami risks, and says it expects its first drought policies to be signed in 2025.

In the financial year ending 30 June 2024 (not the same as PCRIC's policy year), the risk pool's gross written premiums totalled $3.79mn, more than double the $1.29mn it underwrote during the 2023 financial year. No claims were incurred in either year.

Hiscox, Liberty Specialty Markets Paris, Mitsui Sumitomo Insurance and Generali, PCRIC's reinsurers in 2023, remained on the risk pool's reinsurance program during the 2024 financial year, joined by Hannover Re. PCRIC's reinsurance premium paid increased from $819,900 to $3.25mn.

"The growth experienced during 2024 has demonstrated to us all what is possible after years of building and refining a unique capability to serve our region," said Aholotu Palu, CEO of PCRIC.

"With momentum clearly accelerating, the need for timely provision of long-term funding to underwrite the continuation of PCRIC as a trusted partner in resilience has never been more acute."

PCRIC's chair Sarah-Jane Wild noted that as the risk pool has added more clients, demand for technical capacity and knowledge about disaster risk financing "has grown exponentially."

"It is obvious to the board that right-sizing the business for the future is critical to ensuring PCRIC can adequately serve a market now seeking a far wider array of risk management support and solutions than was the case in the earlier years of PCRIC," she said.

"However, for the necessary re-sizing to occur, additional funding will be required. Given the limited capacity to generate revenue above costs from the market, the ongoing dependency on donor partners is again highlighted. To that end, through the course of 2024 the board has supported submission of a number of proposals for further funding for capital, operating and premium financing purposes."