A local insurance company is contending that Barbadians learned nothing from the experiences of Caribbean neighbours to the north who were devastated by hurricanes last year.
Massy United Insurance said despite the billions of dollars in damage to homes and property caused by hurricanes Irma and Maria, Barbadians still did not see the value of insuring their homes and properties.
“Barbados has not really had a mass destruction for a long time and it is difficult to see the pictures on television and relate it back to reality,” Chief Executive Officer Randy Graham said.
“I can’t say that witnessing the damage in other territories have caused Barbadians to rush to buy property insurance because it still doesn’t hit home once the television goes off. Living in the reality is often the best teacher. The Eastern Caribbean per capita rate of insurance is much greater than Barbados because they have been through it,” Graham said during a roundtable discussion at the Hilton Barbados Resort this morning, entitled, Moving Forward After The 2017 Hurricane Season.
The insurance executive acknowledged that there were those who sought insurance coverage, but said many among those were taking unnecessary risks by underinsuring their homes.
Graham explained that because homeowners often only took out insurance policies as part of the requirement from the lending institutions, when they buy or build, they seldom bothered to adjust their policies over the years to account for inflation.
“Some properties are in fact insured for less than 50 per cent of the cost to rebuild them. So even in circumstances where we try to pay as much as we could pay, a number of the homes would not be able to rebuild with the claims that they had. This means that they would have to go back for loans or seek other forms of financing. If they use the insurance pay out only then the quality of the rebuild would substandard,” Graham said.
“Our best advice to people is to get their house insured for at least 85 per cent of the rebuilding value because other than that you would be left with a big financial gap. The reason for underinsurance is often not as a result of laziness or ineptitude. A lot of persons take out insurance when they build their homes but 15 years later the property is insured at the cost of the loan. The reality is that the cost of that same house is going to be double or triple because of inflation. This is the reason that a lot of persons find themselves short,” he added.
Pointing out that across the region premiums for most insurance companies had gone up by 15 to 20 per cent as a result of monies paid out to cover the damage caused by last year’s hurricanes, Graham explained that also could have dampened the appetite for insurance.
“We have seen premium increases in all of the 18 territories that we operate. The reason for that is the level of risk to which these companies are now exposed. It is not that insurance companies are wicked but rather there needs to be a pool of funds coming in to replenish what we have paid out,” he said.