Cedric Stephens | Better engagement needed on risks and insurance

Risks and insurance were part of the national conversation last week. Prime Minister of Barbados Mia Mottley provided the geopolitical context.

She spoke about the Caribbean’s dependence on foreign nations for vital information gathered and disseminated by geostationary satellites. This is a big threat. These objects are ‘incredibly valuable’ for communication and weather monitoring and facilitate navigation.

Weather monitoring is important given the region’s exposure to more frequent and stronger tropical storms, hurricanes, and floods, which, most scientists agree, are caused by climate change.

Prime Minister Holness’ contribution, according to this newspaper’s editorial last Wednesday, was narrowly focused. He spoke about the work of a committee that studied Jamaica’s disaster risk management relief mechanisms and its findings.

The review process, the editorial diplomatically suggested, failed the transparency test. It wandered around the bush by saying that the review should have been “more front-facing and engaging of the public”.

What the commentary also implied was that the administration appeared not to have learned from its experiences managing COVID-19 and may not have benefited from the findings of recent and potential disaster events that have affected thousands of persons in Asia, Europe, Africa, North America, and even Jamaica.

The Insurance Association of Jamaica, IAJ, is the industry lobby group. Its new president is Rosemarie Henry. Last Monday’s Gleaner reported that “with the 2025 hurricane season now under way, IAJ has launched a new public education campaign urging Jamaican property owners, both locally and abroad, to urgently reassess their insurance coverage before disaster strikes”.

The campaign is being implemented in an environment in which the eight ‘dots’ below were deemed separate items:

- Only 20 per cent of Jamaica’s residential properties are insured, and of those, an estimated 95 per cent are underinsured, according to the IAJ.

- The actions of some local new strata corporations and other property owners to explore the feasibility of self-insurance instead of buying traditional coverage from IAJ members due to high costs.

- A Barbados Nation News report, published two weeks ago, that said that consumers in that country, according to Paul Inniss, a former banker, and now executive vice- president and general manager, Sagicor Life Insurance, “are still not adequately covering their assets, and in a number of instances, more people have no coverage at all”.

- Caribbean consumers, according to the Barbadian prime minister, have been experiencing what she called vicissitudes of the cost of living for the last several years.

- Insurers, regulators, and the industry lobby group are yet to recognise the need to make structural and other changes to the insurance business models like their counterparts in Asia and elsewhere.

- The insurance industry continues to rely on traditional economic theory and products that were developed during the age of brick and mortar to meet consumer needs.

- Governments, the regulators, and the industry have not taken any specific actions to close the insurance gap, increase insurance penetration, promote trust, improve financial literacy, and help the insurance industry contribute to the islands’ resiliency to natural disasters – issues that were alluded to in my article last Sunday.

- Neither the IAJ president nor the Sagicor Life executive mentioned the words climate change, which pose existential threats to small island developing states, like Jamaica and Barbados, and their residents.

New York Times reporters Max Bearak and Hiroko Tabuchi wrote in a July 12 article that “the United Nations has set a target for the entire world to be covered by early warning systems for all kinds of natural disasters by the end of 2027. Right now, only about half of the world’s countries have implemented such systems though that represents a near-doubling of the number over the past decade”. Is Jamaica included among the groups that have implemented these systems?

Erin Coughlan de Perez studies disaster risk management at Tufts University in the United States. She said, according to The New York Times, that both rich and poor countries have grappled with funding for systems that ultimately either fail or create enough false alarms to erode public confidence.

Most early warning systems are put into place only after disasters strike, and responses often assume that the next disaster will look like the last, but with climate change intensifying, that is a shaky assumption.

“We’re driving forward while looking in the rearview mirror,” she said.

The recent Guadalupe River tragedy in Kerrville, Texas, is expected to be another example of that trend.

Prime Minister Mottley began her 30-minute address to the recently concluded Caricom Heads of Government meeting with reflections about the seven-decade-long development journey. She called herself a Jimmy Cliff girl and used the words from two of his songs, I Can See Clearly Now and You Can Get It If You Really Want, to exhort her audience to action.

The last three lines of the chorus of the second song are appropriate for the insurance industry, given its challenges: You can get it if you really want, but you must try, try and try, try and try, you’ll succeed at last.

In the meantime, it is not too late for Prime Minister Holness to change course and implement the advice in the editorial.

Cedric E. Stephens provides independent information and advice about the management of risks and insurance. For free information or counsel, write to: aegis@flowja.com or business@gleanerjm.com