Attachments
Executive Summary
Tonga is an archipelago composed of 172 islands spread across a combined land and sea area of 720,000km. According to the 2011 census, Tonga had a population of 103,252 people spread across 36 of the 172 islands. A population scattered so widely across such a large area can pose logistical problems for efforts to facilitate and finance disaster response.
In January 2014, Tropical Cyclone Ian caused widespread damage and destruction on the islands of Ha’apai and Vava’u. Approximately 1,094 buildings in Ha’apai were either destroyed or damaged, and some 2,335 people sought shelter in evacuation centers. There were reports of significant damage to houses, infrastructure, and agriculture across 18 villages located on the islands of Ha’apai, including Uiha, Uoleva, Lifuka, Foa, Ha’ano, and Mo’unga’one. Total ground-up loss for this event was estimated at T$90 million (US$50.3 million), of which T$20.5 million (US$11.5 million) was attributable to emergency loss (PCRAFI 2014).1
Tonga is expected to incur, on average, T$28.2 million (US$15.8 million) per event per year in losses due to earthquakes and tropical cyclones. In the next 50 years, Tonga has a 50 percent chance of experiencing a per event loss exceeding T$319 million (US$178.2 million), and a 10 percent chance of experiencing a per event loss exceeding T$783 million (US$437.4 million) (PCRAFI, 2012).
Tonga has the ability to raise a maximum of T$21.5million (US$12 million) for disaster response. This figure is based on the contingency budget for the fiscal year 2013/14, the maximum annual appropriation into the emergency fund, and the aggregate coverage limit from the catastrophe risk insurance pilot. It should be emphasized that this amount is a maximum and— given the nature of the contingency budget— dependent on how much remains in the budget during the fiscal year when the event occurs. Similarly, the aggregate payout is the absolute maximum that Tonga could receive following an earthquake/tsunami or tropical cyclone. It is estimated that there is a 4.4 percent chance that disaster losses will exceed this amount in any given year.
The Tongan government does not have an indemnity property insurance program in place for its infrastructure assets or property. The government keeps no centralized register of insurance arrangements made by individual government departments, public authorities, or state-owned enterprises.
This report presents for consideration a number of options for improving current measures for disaster risk financing and insurances:
(a) develop an overarching disaster risk financing strategy aligned to existing processes;
(b) develop an operations manual detailing the processes required to facilitate swift postdisaster budget mobilization and execution; and
(c) develop an insurance program for key public assets.