Linking Disaster Risk Financing to Social Protection in Barbados

Social protection systems already play an essential role in poverty reduction in Barbados. There are several non-contributory social protection programmes, the largest of which is the National Assistance Programme (NAP), which provides cash assistance to approximately 6500 households. If these programmes are made more shock-responsive, they can significantly reduce the impacts of covariate shocks by facilitating rapid and predictable assistance to the most vulnerable. Predictable finance is key to making social protection systems shock-responsive. However, reactive resource mobilization has been the most common practice to finance shock responses to date. Ex-post finance resource mobilisation limits the ability of government authorities to plan and implement predictable responses to support affected households and communities. Therefore, the efficiency, cost, and overall shock-responsiveness of social protection programmes can be improved by adopting a disaster risk financing approach. This report outlines options for linking disaster risk finance instruments with social protection systems in Barbados with a particular focus on insurance as part of a broader risk-layered disaster risk financing approach. Catastrophe insurance is already used by governments in the region through the Caribbean Catastrophe Risk Insurance Facility Segregated Portfolio Company (CCRIF SPC), and there are emerging initiatives at country-level for linking potential CCRIF SPC payouts to social protection scale-ups. Building on such regional initiatives as well as on lessons learnt from the COVID-19 response in Barbados, this report provides recommendations to strengthen and institutionalize linkages between disaster risk finance and social protection to make the country’s social protection systems more shock-responsive.