In the wake of Hurricane Beryl, head of the General Insurance Association of Barbados (GIAB) Randy Graham has reassured residents that insurance premiums on property are not likely to increase.
However, he emphasised the urgent need for mandatory building codes to ensure homes are built to withstand severe weather events.
While Graham noted that Hurricane Beryl was not significant enough to trigger an immediate increase in insurance premiums, he stressed the importance of being vigilant as the hurricane season progresses.
“It was not a big enough event to see premiums increased, but it is a reminder of what we can expect with the impact of climate change in the Caribbean. However, this position can change because we are only in July and we have to wait until we see how the rest of the season goes,” the GIAB head explained.
He also highlighted the impact of climate change on hurricane patterns, suggesting that storms were becoming more frequent and severe.
“Right now, there is no conversation at all in the industry about premiums or changes in prices. It is far too early in the season and it is only just one storm. However Beryl, which has set a number of records, has triggered a discussion about climate change and what it means for us now that there might be longer hurricane seasons. We normally see the stronger storms in August, now we are seeing them in July and we need to determine if this is going to be the norm and whether we are going to see stronger storms later into the season,” he said.
Patrick Hinkson, general manager – Barbados & The Eastern Caribbean, Sagicor General Insurance Inc., however said that an active hurricane season which causes significant property damage, would certainly impact the reinsurance market. He said this would result in a rise in reinsurance costs that “will be passed on to consumers”.
“Yes, we do expect insurance rates to rise but, do we expect that they reach a level of unaffordability? That is dependent on the household’s disposable income and their risk appetite. There will be customers who opt to not insure and take the gamble as it relates to the potential of a fire, earthquake, or hurricane,” Hinkson said.
“It is important to note that reinsurance capacity will continue to be tight but should be available to provide protection for current insureds. However, we expect that insurers will continue to struggle to get additional capacity to accommodate any significant portfolio growth. This may impact the ability of the sector to provide adequate coverage for new projects, new insureds, or significant increases in sums insured,” he added.
As it relates to the need for mandatory building codes, Graham stated: “We have been saying this for a few years now and we are going to continue to push it – we need mandatory building codes.
“Most people don’t know if their homes are retrofitted with Category 4 hurricane straps or windows, but with building codes you would not need to guess; we will know because it would be mandatory. As insurance companies, once houses are built with mandatory building codes, we will know that the homes in Barbados are built to a certain standard of resistance,” he added.
Graham pointed out that Barbados, along with other Caribbean nations, must recognise their vulnerability due to their location in the hurricane belt. Barbados is the only country in the region that has mandated building codes. “Barbados and other Caribbean countries must accept that we live in a hurricane belt, which means they must build houses to suit,” he said.
