New Flood Insurance policy on the horizon

Mar 20, 2014 News

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…businesses, homeowners worried
A wide section of the society has responded in fear of the possible implications that will stem from the recent notice by the Insurance Association to restructure its policy as it relates to what damages by floods can be considered “insurable”.

The development, according to the Insurance industry, comes in light of the inaction by the relevant authorities to correct poor drainage issues.
The flooding which occurred in central Georgetown and its environs on January 14, last, just a few months after the one which occurred on November 2013, has pushed the Insurance Industry into a state of worry, thereby causing it to seriously consider making significant policy changes.
It reminded through its published missive on Sunday last that its members had spoken to the main causes of the floods which, according to them, were poor drainage facilities and the dumping of garbage in drains and canals.
A lack of information pertinent to when the dysfunctional pumps around the city would be fixed was also a factor that was taken into consideration by the insurance industry.
With the rainy season expected shortly, and given the country’s inability to provide reliable weather forecasts, the Insurance Industry expects more flood damage claims.
The Association said, “It should be pointed out that insurable risks are subject to fortuitous occurrences and when an event lending to a loss is inevitable, then the risk becomes uninsurable”.
Putting it simply, the relevant authorities which have been slow to action will soon cause the risk of loss by flooding to become uninsurable.
As a result, the industry will soon inform policyholders of the new system of endorsing measures that can be eligible for flood cover.
While the industry acknowledges that the new policy will mostly affect businesses and homeowners, it will continue to hold firm to the decision until it is satisfied that significant action has been taken by the appropriate Ministries and the citizenry to remedy the situation.
However, several businesses who asked to remain anonymous, expressed their views on the recent development.
One representative of a stationery supply store said, “I am deeply disappointed at the decision being taken by the Industry Association. Floods are now an accepted norm. Floods cause a lot of damage and though many of us are made to suffer year after the year, the government is doing nothing to fix it.

“No provision is being made on the government’s part to help us and protect us. How could we be made to suffer for the government’s mistakes? We need a general to explain this better. We pay lots of money for coverage; now we are hearing that we won’t be getting coverage soon. This has gone to a level that will be financially burdensome on many businesses owners.”
One East Coast Demerara resident, who is a single parent and entrepreneur, said “This is ridiculous. In November I had up to $170,000 in damage. Come January and I had $60,000. Now the insurance company is saying that changes will be made to the policy. I can’t accept this at all. This is something really serious. Why do we have to pay for a weak and lax system? Whoever is responsible should be made to pay. How are we responsible for the pumps that can’t work and the ones that can’t reach here up to now? Something must be done about this. I don’t think the Industry understands what they are really doing.”
Junior Finance Minister, Bishop Juan Edghill, asked to comment on the situation yesterday, particularly on what moves will be made on the part of the government to rectify the situation, said, “The statement as released by the Insurance Industry is indicative of the consequences that flow from the neglect to ensure that the drainage and pumps for draining the city are kept in a manner that can be considered acceptable.
“This is an indictment on the Mayor and City Council…the system is compromised and there is a great need for the Council to get busy and all businesses should cooperate in that process.”
A Partnership for National Unity’s Shadow Minister of Local Government, Ronald Bulkan, however, said that while he understands the position of the Insurance Industry, attention must be paid to the implications such a decision will have on home owners.
“It is a fair position taken by the Insurance Industry and it is a serious wakeup call for people to understand the effects of the incompetent management system they are forced to endure. It’s a systemic failure of government and it is sad that too many of us accept this.
“The problems when it comes to floods are manmade. The constant interfering with the Council by the Ministry of Local Government has made matters worse at the Council and the solution is elections. New members need to be instituted and the system changed. The blame should fall at the feet of the government.”

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