7 months ago
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Sources say that hurricane forecasts for 2024 will be published soon even though March is only two weeks’ old and the Atlantic Hurricane Season will not formally start until June 1.
One foreign insurance industry resource predicted that the approaching season will be “extremely active”. Another calls it “a hurricane season from hell”.
The 2024-25 Budget season started soon after the local government elections. Estimates for the current fiscal year have been tabled in the House of Representatives.
The Jamaica Information Service reported recently that a plan to increase Jamaica’s “resilience to climate change through enhancing adaptive capacity across priority sectors was allotted $6.9 million”. The programme is slated to end before the 2024 hurricane season begins.
After reading the article, I wondered what US$44,517, which is what the allocation converts to in hard currency, could do to help reduce the climate-change risks that the country faces. Was this a realistic attempt to address the problem? I learned later that more funds had been disbursed in earlier years, and, importantly, that citizens living near the Upper Rio Minho River Watershed and others are benefiting.
The JIS article about the four-part flood-mitigation project, reminded me about a piece I wrote over a decade ago, on April 14, 2013. One part of it read: An IMF report stated that a 2006 study found that the six Eastern Caribbean Currency Union countries “rank in the top 10 most disaster-prone countries in the world when considering disasters per land area or population. The rest of the Caribbean is not far behind, with all the countries among the top 50 hotspots. Over the last 60 years, countries in this region have suffered from about 200 natural disasters, mostly tropical cyclones (usually storms or hurricanes) and floods.
Have any changes occurred during the past 11 years? Experts say that hurricanes are likely to be more frequent and intense now and into the future because of climate change.
Swiss Re Limited is a reinsurance company founded in 1863 and headquartered in Zürich, Switzerland. It is one of the world’s largest reinsurers. Local and regional insurers are among its clients.
The reinsurer’s research arm is called the Swiss Re Institute. The latter issued a report two weeks ago, Changing Climates: The Heat Is (Still) On. Here are three takeaways:
• The global temperatures recorded in 2023 were the hottest ever. The warming trend has significant implications for the planet (and the Caribbean region). A BBC report last week said February’s average temperatures were the highest in history.
• Elevated temperatures trigger floods, tropical cyclones (or storms), European winter storms, and severe convective storms (thunderstorms). These are estimated to cause economic losses of at least US$200 billion annually.
• If global warming continues, the world could lose seven to 10 per cent of its gross domestic product. In the past, Jamaica was estimated to lose two per cent of its GDP to catastrophes.
These are some of the factors behind the price rises and problems in sourcing property insurance coverage in the Caribbean, the US Gulf States, Florida, the US eastern seaboard, California, parts of Europe, Australia, and New Zealand are now facing.
The Jamaica Observer reported on the International Monetary Fund’s February 28, 2024, press release about Jamaica this way: “The IMF continues to lavish praise on Jamaican authorities for the work that is being done to improve economic conditions on the island but warned that it could be undone by ongoing geopolitical tensions elsewhere in the world and climate-related events. The praise and warning were contained in its latest assessment of Jamaica’s economy – the Article IV consultations – and the second review of the progress made to date under the Resilience and Sustainability Facility and the Precautionary and Liquidity Line agreements.”
The IMF’s last report on Jamaica was positive. I also noticed that the IMF has edged away from words like exogenous shocks that were often used in earlier reports. An exogenous shock is an unexpected or unpredictable event that occurs outside an industry or country but can dramatically affect the performance or markets within an industry or country.
On the other hand, the fund’s PR folks do not seem to believe in the maxim: less is more. They used nearly a dozen words to describe threats to Jamaica’s economy – “ongoing geopolitical tensions elsewhere in the world and climate-related events” – instead of saying ‘exogenous shocks pose threats to Jamaica’s economy’. It surprised me that they did not use a Plain English algorithm or AI to help write the release.
My initial scepticism about local efforts to address climate change risks began to disappear after I read the following in the IMF statements: The authorities are advancing their ambitious climate policy agenda to increase resilience to climate change and catalyse climate financing. Recent reforms include steps to establish a natural disaster reserve fund, strengthen climate-related elements in public investment management, and enhance the climate risks assessment in the financial system to embed these risks into supervisory activities. Continuing efforts to build resilience to global shocks through prudent policies and reforms to tackle supply-side constraints and raise productivity can further unleash Jamaica’s potential and foster inclusive growth over the medium term.
The concluding paragraphs of the report highlighted the areas of emphasis for government policies and future action. It suggested: reforms to foster productivity and build resilience to shocks, including steps to improve competition and resource allocation, strengthen education and training, upgrade infrastructure, reduce crime and barriers to trade, and close gender gaps. Social policies could benefit from enhanced targeting. Improving data availability will benefit evidence-based policymaking. Directors encouraged progress on the climate agenda to build resilience, transition to renewables, prepare the financial system to monitor risks, and catalyse climate financing.
The GOJ’s National Natural Disaster Financing Risk Strategy, which Minister of Finance and Public Service Dr Nigel Clarke briefly discussed when he opened the 2024-2025 Budget Debate last Tuesday, also provided reassurance.
Despite its tiny contribution to global emissions, there are other indicators that this island’s climate-change agenda is being carefully implemented. Minister without Portfolio in the Ministry of Economic Growth and Job Creation, Senator Matthew Samuda, reported at a recent sitting of Parliament’s Standing Finance Committee, according to the JIS, the country “is well on its way to not just achieving, but exceeding its emission reduction target by 2030”. This is indeed welcome news.
The Gleaner’s report last Thursday on the PSOJ/IDB Empower JA forum under the theme ‘Sustainability and Climate Change-Empowering SMEs for A Climate-Resilient Future’ provided an example of a non-governmental activity designed to address the climate-change threats. Developers were urged “to prioritise the integration of climate= resilience standards in their construction.”
Malini Samtani, advisory officer for climate change at IDB Invest, said incorporating resilience standards in construction projects upfront “increases cost by only one to two per cent”. Absent from the debate were contributions from commercial banks and property-insurers companies, whose businesses are not insulated from the effects of climate change.
Local insurer British Caribbean Insurance Company shared a summary of its climate change policy statement with me. It is sent to policyholders and intermediaries. This is a good start.
With its enviable financial strength certification from the world-leading insurance rating agency, A.M. Best – one of the few local underwriters that has achieved this position – BCIC must do more. It should be blazing the trail in the development and implementation of the insurance industry’s strategies in response to the opportunities and threats created by climate change.
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
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