Committee for the Abolition of Illegitimate Debt

A climate insurance scheme in the Caribbean has received $293 million in premium payments and grants from donors since it began in 2007 but has paid out just $131 million in claims. In contrast, $105 million from the scheme has gone to private insurance companies as profit Profit The positive gain yielded from a company’s activity. Net profit is profit after tax. Distributable profit is the part of the net profit which can be distributed to the shareholders. .

The figures are released in a new report from the Jubilee Debt Campaign, which shows that disasters linked to climate change leave affected countries more indebted than they were before the disaster hit.

Climate ‘risk’ insurance is being heavily promoted in response to increasing damage from disasters. However, the report argues that the current model – where the insurance is funded by premiums from affected countries – puts the costs back on the victims of climate change, rather than those who cause it. Furthermore, insurance is a highly inefficient use of resources. The scheme in the Caribbean, the CCRIF SPC (formerly the Caribbean Catastrophe Risk Insurance Facility), has received $162 million more in premium payments and grants from donors than it has paid out in claims.

Sarah-Jayne Clifton, Director of the Jubilee Debt Campaign, said:

“Promoting insurance premiums in response to rising damage from climate change is fundamentally unjust, putting the burden on the victims of climate change, rather than those who have caused it. Furthermore, the evidence from existing schemes is that they are a net drain of resources, taking money away from impacted countries and into the hands of the global insurance industry.”

In the report Jubilee Debt Campaign show that for the most economically damaging disasters in the 21^st Century, in over 80% of cases government debt Government debt The total outstanding debt of the State, local authorities, publicly owned companies and organs of social security. was higher two years after the disaster. In only one country did debt fall without debt relief being given.

The report has been released ahead of climate change negotiations in Katowice, Poland, from 3-14 December 2018. Around 80% of the most damaging disasters since 2000 have been tropical storms, over 90% of them have been in Small Island Developing States, with over 60% being in the Caribbean. In contrast to suffering disproportionately from climate-related disasters, Small Island Developing States have made little contribution to climate change. 29 Small Island Developing States, with 0.7% of the global population are together responsible for just 0.2% of global carbon dioxide emissions.

Many small, impoverished states are already heavily indebted. The IMF IMF
International Monetary Fund Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.

http://imf.org conducts debt sustainability analyses for 21 impoverished Small Island Developing States. Of these, two are in default, 11 are at high risk of debt default, eight at medium risk and none are at low risk.

Jubilee Debt Campaign are calling for a comprehensive debt relief scheme for small states to get debt down to a sustainable level to allow for better preparedness ahead of disasters hitting, as well as a permanent, effective, automatic debt relief process in response to disasters.

Sarah-Jayne Clifton, Director of the Jubilee Debt Campaign, said:

“It is a moral outrage that those who are most affected by climate change are being made to take on debts because of the disasters that climate change is contributing to. This is on top of the high, unjust debts, that many small states already have. We need a comprehensive mechanism to get debts down to a sustainable level, then an automatic debt relief process after disasters hit, so that countries are not locked in a spiral of worsening debts as climate change gets worse.”

Read the report here

Source: https://jubileedebt.org.uk/press-release/climate-scheme-hands-105-million-profit-to-global-insurance-industry