Insured costs as a result of damage from Hurricane Dorian could top half a billion dollars, President and Chief Executive Officer of Bahamas First Holdings Ltd. Patrick Ward said yesterday, explaining that based on the damage he has seen, the $500 million quoted in the media yesterday could be a conservative figure.
Ward, who was speaking at a Bahamas Insurance Association (BIA) press conference yesterday, said $500 million will only be a fraction of the economic cost caused by the hurricane, as Dorian will be proven to have created the most damage of any storm in “our lifetime”.
“Our perspective is the $500 million may be conservative if you look at the elements that relate to Hurricane Matthew, with the distribution of those losses, and you look at the damage that is clear from photographs and just inspection in Abaco and Grand Bahama,” Ward said.
“There is no question that the significance of damage in Abaco and Grand Bahama is going to be significantly more than would have been the case in any storm certainly in our lifetime, impacting those two locations, so that number ($500 million) could be conservative in terms of the overall costs.”
Ward added that there still exists a “significant” gap in coverage between the insured and the uninsured in The Bahamas. While none of the BIA members could say how many homes and businesses on Abaco might have been uninsured, they explained that it may be as high as 50 percent on Grand Bahama.
“While this may seem like a sales pitch, it really isn’t, because I think it is an important aspect of living in this part of the world that we’re going to be, for a very long time, contending with these kinds of losses in the future,” Ward said.
“And so we’ve got to find some mechanism to effectively close that gap between persons who have insurance and people that elect, for whatever reason, not to have insurance. I know a lot of it is driven by economic factors.
“In this part of the world, given that we will be facing disasters on a relatively frequent basis, we have to find a way to close that gap.”
Ward said reinsurers understand that the frequency and intensity of storms like Dorian that affect the Caribbean could become the new normal, as the world contends with the effects of global warming.
He added that while the kinds of payouts that will come from insurance claims as a result of Dorian will likely cause insurance premiums to increase, the sector has to find a way to work with Bahamians.
Ward said insurance payouts are an important part of stimulating economic recovery and keeping the government from driving up deficit levels in the aftermath of a storm.