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Monday, July 6, 2009

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Govt ups coverage under regional insurance plan By VERNON CLEMENT JONES ~ Guardian Business Editor ~ vernon@nasguard.com: The government has renewed — even upped — its insurance coverage under the regional natural disaster fund. That's despite questions about the effectiveness of the plan, protecting public buildings and not those of the private sector. "The Bahamas has increased its coverage by ten percent at the same premium as last year," Marsha Smith of the Caribbean Catastrophe Relief Insurance Facility (CCRIF) told Guardian Business Tuesday, pointing to coverage for about $27m worth of damage sustained in any one year due to natural disaster, most likely a hurricane. The increased protection, which lowers the trigger threshold from a one-in-35-year magnitude storm to one in 15 years, comes courtesy of the CCRIF's move to lower its premiums this year by that same 10 percent this year. That's an across the board reduction for all of its member nations. Continuing Bahamian participation is being criticized by some Bahamians in Inagua and other southern islands, concerned the insurance fails to represent good value for money. Those concerns are tied to the so-called trigger amount — how much damage government infrastructure would have to sustain in a storm — and the very fact that the coverage does not extend to residential communities hit by a hurricane. "We are the ones most often in the direct line of the hurricanes," David Farquharson told Guardian Business in an earlier interview, specifically referring to what independent adjusters assert was $10 -40m of damage wrought in Inagua by Hurricane Ike last summer. "Whether the government has to remove the conditions about the number of government buildings or withdraw from the fund all together has to be addressed because it isn't doing us too much good as it is now." Set up in early 2007, the insurance facility is "owned, operated and registered in the Caribbean for Caribbean governments" and aims to provide short term liquidity to its 16 member countries after a disaster. It also saves them about 40 percent in individual premium payments obtained through private insurers. But Farquharson worries the fine print on that contract, directly tying eligibility thresholds to government infrastructure, means government will need to continue stepping in to help Inaguans after a serious storm. It will also have to do so without the benefit of the insurance facility and by reaching into its own pockets like it did with Ike. "As you can imagine, since CCRIF policies cover catastrophic losses to government and Great Inagua, a sparsely populated island with little government infrastructure, was the most affected, the CCRIF did not make a payout," said Smith in a written statement last January. Many Inagua residents are in fact without basic disaster insurance, given most own their property free and clear of the kind of mortgage agreements mandating even limited coverage. It was heralded as groundbreaking when the World Bank hosted a donor conference with the aim of raising seed money for its startup. A total of $47m was pledged by Canada, France, UK, the Bank and the Caribbean Development Bank. It falls to regional members to pay millions of dollars in annual premiums. The CCRIF will now only release that information specific to The Bahamas, along with its trigger points, with the expressed approval of the government, Smith said. "We do not provide country specific information, outside of coverage for our member governments, without their explicit approval," she told Guardian Business Monday. Wednesday, June 24, 2009