Hurricane Irma Could Trigger Insurance Rate Hikes
BRIDGETOWN, Barbados, Tuesday September 12, 2017 – Having battered a number of Caribbean countries and the US state of Florida, leaving behind in the region nearly 30 deaths and hundreds of millions of dollars in damage, Hurricane Irma is likely to inflict some more pain of a different kind on the region.
A leading insurance official in Barbados is hinting at possible increases in property insurance rates due to the carnage caused by the killer storm, particularly in Anguilla, Barbuda, the British Virgin Islands and the French-Dutch island of Saint Martin.
Speaking even before Irma dealt its final blow to the Caribbean as a category five cyclone, before heading to Florida as a category four storm, flooding streets, spawning tornadoes, and knocking out power to millions of people, President of the General Insurance Association of Barbados Michael Holder left no doubt what was likely to happen should insurance companies have to dish out large sums in compensation.
“I know for a fact, for Bahamas they have already stated that if they are impacted by Irma they estimate that their rates can increase something like 20 to 25 per cent next year. So that is the kind of eventuality you can have coming out of this type of thing,” Holder said.
The Bahamas escaped major damage and the Lynden Pindling International Airport reopened yesterday, while the Nassau Port reopened on Sunday, although cruise ships are not expected to begin docking there before tomorrow.
Barbados escaped Irma’s fury, with the storm causing no more than high sea swells, and from 200 miles away, knocking off the roof of one house.
This notwithstanding, Holder said Barbadians may have to pay for the suffering of its neighbours.
“Generally, you find that even though Barbados may not have been impacted, the region was impacted, and the region may use the same reinsurers. So ultimately what can happen, not that necessarily it will happen, but what can happen is that you can find that depending on the amount of insured losses that has taken place – because we need to be mindful of what transpired with Harvey and Texas and we would obviously know what happen with Irma and Barbuda, Tortola and whoever else in the path – and a combined result of that, depending on the number of insured losses, you can see that reinsurers may say to us next year, ‘well guys, your property rates may have to be adjusted upwards somewhat’.
“It is not something that is definite but it is a possibility depending on the net result of the total insured claims coming out of the systems,” the insurance official explained.
With several countries still assessing the damage caused by the monstrous storm, Holder said it was difficult to estimate how much insurance companies would be forced to pay out in compensation.
He said the assessment could go one for some time and it could be weeks, and possibly months, before a determination was made as to the total payout, adding that losses could be greater than the amount for which storm victims were insured.
In 2010 Barbados had a brush with Tropical Storm Tomas, which resulted in just over 1,700 property claims and a payout of about $28 million from the insurance industry.
Holder said while there were some “slight adjustments” then, compensation payments were not significant enough to force the industry to increase premiums.
“So I think we can appreciate that with a direct impact from a system the quantum of claim payments that probably would have to be made,” he said.
Antigua’s sister island Barbuda was the first island to suffer a direct hit from Irma, and Prime Minister Gaston Browne said 95 per cent of homes were destroyed by the hurricane. The expense of rebuilding houses alone is expected to top US$59 million. (Barbados Today)