PCRIC’s Response to the Tongan Volcanic Eruption and Tsunami

The recent images of recovery efforts in Tonga serve as a poignant reminder of the tragic events that unfolded just over a month ago. The human cost, with lives lost and families displaced, is immeasurable, but the Pacific Island community continues to share in Tonga’s grief and heartache. The World Bank estimates the immediate damage cost to be around US$90 million, with the ongoing economic impact likely to be significantly greater.

This incident underscores the numerous risks faced by our Pacific Island Countries (PICs) and illustrates how swiftly circumstances can change. With homes, livelihoods, and public buildings destroyed in mere minutes, the effects will be felt for many years to come. Yet, amid the chaos, inspiring stories of heroism and survival have emerged, offering resilience and hope for the future.

This event also highlights the principles behind the establishment of the Pacific Catastrophe Risk Insurance Company (PCRIC). PCRIC was created to address the Disaster Risk Finance needs of Pacific Island nations by providing appropriate insurance products and services on a commercially sustainable basis.

Since its inception, PCRIC has aimed to offer a variety of disaster risk finance products grounded in the best technical knowledge and a deep understanding of risk relevant to specific events in the region. We provide individual nations with the autonomy to choose while also benefiting from the pooling of risk and resources at the regional level.

We take pride in fulfilling our policy commitments to client nations in the past, including Tonga, which received record payouts for Cyclone Gita (February 2018) and Cyclone Harold (April 2020). In this latest incident, PCRIC’s response has been aligned with the existing policy. After a comprehensive assessment of the Hunga Tonga-Hunga Ha’apai event, both PCRIC and Tonga recognized that a policy payout in this case would not align with the mutually agreed coverage. However, this outcome does not lessen PCRIC’s concern for the nation and its people.

PCRIC’s services extend beyond just sovereign-based financial products; we have reached out to the Government of Tonga to offer any necessary assistance. We continue to leverage our position among Disaster Risk Finance institutions in the region and are actively engaged in discussions with various entities, advocating for Tonga.

While the physical damage to Tonga is devastating, we carry an even heavier burden for the enormous human toll this event will impose on the hopes and aspirations of the Tongan community in the long term. PCRIC stands in solidarity with the people of Tonga, committed to ongoing dialogue filled with positivity, encouragement, and hope. We believe this approach will have a meaningful impact that surpasses any financial instrument.

We already witness signs of hope—the value of strategic planning in disaster risk financing and the establishment of robust preparedness and response strategies have been clearly demonstrated by the Tongan government. Their efforts in supporting the community post-disaster have been commendable. With the generous support of the international community, we are confident in Tonga’s capacity—its leaders and its people—to recover and continue building a positive future.

For more information, please contact:
ceo@pcric.org or aholotupalu@yahoo.co.uk