Hurricane on the Caribbean. (Getty Images)

By Sophie Hares

PANAMA CITY, Panama, 3 January, 2020 - Menaced by increasingly violent hurricanes, Caribbean countries face an enormous bill to better protect themselves disasters and need to weave a web of financing options to help insulate against shocks, said speakers at a regional conference.

Boosting lackluster economic growth, ramping up insurance and disaster funds, and embracing the private sector would help bolster countries which needed to invest more in resilience, said speakers at the Comprehensive Disaster Management Conference (CDM11) in Sint Maarten.

"Budgeting for disaster should be a must for us all," said Silveria Jacobs, prime minister of Sint Maarten, which was ravaged by Hurricane Irma in 2017.

A common disaster fund and a joint insurance plan to protect the small businesses that drive local economies could help the region, she told the conference, organized by the Caribbean Disasters and Emergency Agency (CDEMA).

"Government cannot definitely not go it alone… Business resilience drives the economy which ensures that islands can bounce back even faster," said Jacobs, who urged more investment in resilient infrastructure.

With many countries heavily indebted, creating layers of risk financing was key if countries are to limit the economic impact of disasters, which could also include flooding, drought, tsunamis and seismic activity, said speakers.

Risk financing layers should include funds shaved from national budgets, paired with fast-paying parametric insurance and access to lines of credit, said Ming Zhang, World Bank regional practice manager for urban and disaster risk management.

While new insurance products could help protect livelihoods and the fishing industry in the event of disasters, there was more scope to expand insurance to include households and small businesses, said Zhang in an interview.

"You cannot set up a contingency fund to address a Category 5 hurricane," said Zhang, who estimates disasters cost the Caribbean 1 percent of its gross domestic product each year.

"You need a risk financing strategy… each country should look at different layers and different contingencies, insurance and other mechanisms."

While countries such as St. Lucia and Grenada were looking to set up disaster funds bolstered by lines of credit, there needs to be more focus on how money was being spent in the region to better prepare for disasters, he said.

More advanced recovery planning was needed to make sure emergency shelters and supplies were available, while strengthening homes and infrastructure could help reduce economic impact down the track, he said.

"In the midst of borrowing for public investment, governments need to ensure that these funds are certainly being spent to ensure resilience," said Ronald Jackson, CDEMA executive director, said in an interview. "That's one area that will drive down exposure and be a lower cost to government when these events occur."