Insurance industry wants Govt help to encourage more buy-in

With between 60 and 70 per cent of homes in Barbados said to be uninsured, insurance industry executives are touting the need for increased education on home insurance and for the government to team up with the private sector to encourage homeowners to buy more insurance.

But they appeared lukewarm on the idea of a publicly funded national home insurance pool in interviews with Barbados TODAY. And one executive also suggested that with the relatively higher risk – and premiums – that timber homes tend to attract, homeowners should abandon timber home construction, a move that could radically change the face of the island after nearly 400 years.

President of the General Insurance Association of Barbados (GIAB) Randy Graham told Barbados TODAY that while he agreed that the establishment of a national insurance plan in Barbados was worth looking at, he recommended that it should model the Caribbean Catastrophe Risk Insurance Fund, the regional insurance risk pool.

Graham said: “What that does it makes some form of cover for hurricanes or earthquakes or even fire, available for the masses of the population at a reduced cost. In the first instance, we can ask international funding agencies to help fund the cost of the setup and even the premiums in the first couple of years, and as households get it and see it in use they can then take on the cost of it going forward. I think that is something that can definitely work and that would give us a chance of getting more houses insured in Barbados,”

But another industry stalwart who did not want to be identified said that while the idea of a national insurance pool sounded “nice on paper”, it could prove to be a difficult proposition given the varying risks between wooden and concrete structures.

Chattel houses carry greater risks and therefore can cost twice as much to be insured per $1,000 in value, compared to a concrete structure of the same size.

“The bottom line is that you are going to end up having a loss because whether it is a fire, a category one, two or three storm, the wooden houses will be the first to go,” said the insurance manager.

Instead, he suggested that government come up with a plan to increase the concrete housing stock for individuals who were currently in wooden structures.

“If you live in a wooden house and you own the land and can provide evidence you should be allowed strictly to renovate your house with concrete. It allows for less pressure on the government,” he said. “Repairing the house and putting them back in wood don’t make sense.”

Chief Executive Officer of Trident Insurance (Barbados) David Alleyne, who had put forward the idea of a national pool during a recent interview with Barbados TODAY, said that to encourage greater take-up of property insurance across the island there needed to be a collaborative effort “across all agencies and entities in Barbados” so that government was not left with a bill for repairs or the insurance industry left with a loss.

“It cannot be government stipulating, but collaboration between Government, private sector, and professionals in the building industry,” he said.

Once that collaboration was achieved, Alleyne said, “at least to a certain level that is acceptable for sign-off – that is either mandated or agreed to by government departments, builders and insurance company – then the standard of construction in Barbados overall would rise”.

Alleyne gave an assurance that wooden structures were insurable once they were built to certain specifications including being secured to the foundation, having an affixed roof, and secured windows and doors.

He estimated that most of the over 2,300 properties reportedly damaged by Hurricane Elsa were not insured. Most of them were said to be wooden structures or a mixture of wood and concrete.

The GIAB’s Graham said he believed greater awareness could help to improve insurance take-up across the island, adding that not many people understood how insurance worked.

He brushed aside the notions that property insurance was too expensive or that storms did not affect the island on a regular basis.

Graham said: “I think what we need really is a lot of public education to get people to understand that these things can happen very quickly and it is very unpredictable. Although you may go a year or two without using your policy it is still better to have it in place because when it does happen it is a big financial charge like we are now seeing, to be able to replace or repair your house without assistance. Insurance is still the best way to deal with it.”

But, he said he did not believe home insurance should be made mandatory at this point.

But amid their calls for more public education on home insurance, the insurance firms reported a sharp spike in the number of enquiries about home insurance and requests for beefed-up insurance policies in the wake of Hurricane Elsa.

Graham, Chief Executive Officer of Massy United Insurance, said from all accounts there has been “a huge spike” in the number of individuals enquiring about insurance following Friday’s episode, though pointing out that this was always the case after every hurricane.

Alleyne also reported that Trident Insurance saw an increase in the number of individuals inquiring about home insurance following last Friday’s Hurricane.

“We have had quite a few queries about different things – people seeking advice . . . but also request for increases in sums insured to more adequately reflect values and new clients who sought to protect their properties,” he said.

General Manager of Consumers’ Guarantee Insurance Peter Harris told Barbados TODAY his company also saw a definite surge in the number of people seeking to insure their property or upgrade their insurance. (Harris is chairman of Barbados TODAY).

“We have seen clients reconfirming their coverage, updating premium payments and increasing sums insured,” said Harris. “We have also seen more people asking about home insurance.”