Time for National property insurance plan – GIAB

With the government declaring that it can no longer afford any large-scale repair of uninsured homes damaged during hurricanes, the head of the General Insurance Association of Barbados (GIAB) believes that it is time for a serious discussion on creating a national home insurance scheme.

Pointing out that such a move was already taking place in other countries, Randy Graham, the president of GIAB told Barbados TODAY: “We would love to enter discussions with any agency on how that could work.”

GIAB estimates put the number of insured properties on the island at 60 000.

“We would not be re-inventing the wheel. Look at Florida, for example; when there was flooding, it became so commonplace where people could not afford to pay for the flood insurance,” Graham said.

“So what the state did was create a national insurance plan where every house is covered to some minimum from the flood and everybody contributes to that, so that if there is flooding, they know where the funds are coming from to repair those houses. Every property participates and every property is covered. So I still think there is scope in Barbados to evaluate that possibility where every property has some level of minimum cover against a hurricane and if there ever is one, we know exactly where the pool of funds is coming from to cover that.”

Though acknowledging that the plan may not provide coverage for the entire home, the GIAB official said it would cover a fixed amount to allow persons to start rebuilding.

“We need to get the public sector and private sector together to talk about that,” Graham added.

His comments come on the heels of a warning by Minister of Home Affairs Wilfred Abrahams last weekend that the government was not financially able to repair any large number of homes as it had done in the aftermath of Hurricane Elsa in 2021.

The minister told reporters: “There will always be those below a certain income level who can’t do better, and we will have to cover them. But for those who can afford to insure their house and choose not to, they cannot expect the same level of government intervention.

“We are not in a crisis situation at the moment, but the government is not financially in a position to undertake what was done after Elsa again. That was one of the largest social investment exercises by any government of Barbados.”

Despite this, Abrahams also insisted that the government would not be mandating homeowners to have property insurance.

Agreeing with the minister’s stance, Graham said compulsory home insurance would be a challenge in the current socioeconomic climate and it would be unaffordable for many people.

“Making it mandatory does not mean that they will get house insurance,” he suggested.

Yet the spokesman for the insurance industry insisted that people must understand the value of insurance in helping them rebuild or repair after an event.

Graham said: “If your house is valued at $200 000 and a hurricane damages it significantly and you need to repair half of your house, you either need to have savings of $100 000, have to go and borrow it from a bank, or have your property insured where the insurance company shows up with a cheque to repair the house. Government cannot budget for repairs to personal property, so those owners have to take responsibility.”

He said insurance companies would work out payment plans so people could pay premiums in instalments, and noted there were options to keep costs down by opting to insure the building only instead of the contents.

“You can work with your insurance carrier to ensure that you can get back on your feet, but being in a position where the day after a hurricane you have no clue where the money is coming from to rebuild your house is one of the scariest positions to be in,” he advised.

jeniquebelgrave@barbadostoday.bb