Copyright 7newsbelize
The effect of the storm will take years to recover from - and it may end up being felt all the way in Belize - mainly in increased insurance premiums. That's because Belize, Jamaica and other Caribbean nations are backed by the same global insurers - and when one country takes a major hit, it has a ripple effect on premiums across the region. RF&G's Managing Director Andrew Roe told us Melissa was an eye opener: Andrew Roe, Managing Director, RF&G Insurance "So from an insurance point of view, it is an eye-opener. We don't get many opportunities to see losses of this scale and magnitude, especially in the Caribbean. But we have never seen, at least not in modern history, a Cat 5 with such extensive and powerful winds go into another Caribbean country, where it's important to realize that although insurance companies are there and people have insurance, the majority do not. It's a feature of the insurance market in the region, that insurance penetration, meaning how many households, businesses, et cetera, have insurance, is very low." "Now, in the Caribbean, there's only a handful of companies, global companies, that do business with the Caribbean insurance industry, which means that who RF&G re-insures with is going to be the same or at least a few of the same companies that all of those insurance companies in Jamaica are re-insuring with." "So now, coming back to your point, what's the ripple effect? The ripple effect is that these re-insurance companies see and are paying substantial losses in Jamaica, and will continue to do so for a little while." "And if those losses exceed what they might have predicted is reasonable or what they have priced for, premiums have to go up. And when premiums go up, it's not just Jamaica who's going to pay more, it's going to be the entire Caribbean region." Jules Vasquez "Because we're in the same insurance pool, it has a directly proportional relationship to what happens to insurance rates here in Belize." Andrew Roe, Managing Director, RF&G Insurance "Yes, and it did happen in 2017. There was three major hurricanes impacted the Caribbean. It was Harvey, Irma, and Maria. All of those had an impact on the re-insurance industry. Rates moved up slightly afterwards. The initial projections of what Hurricane Melissa or what's coming out of Hurricane Melissa from an insurance point of view is that the insurance impact is probably going to be, it'll be sizable, but not anything that the insurance industry cannot withstand and certainly not something that will drive rates up tremendously in a short period of time. That being because of where it made landfall and already explained that the insurance penetration is very low." "And we're not so we're not seeing that there's going to be huge payouts now, had Hurricane Melissa made landfall in Kingston. Totally different story. That same level of catastrophe would have been laid down on Kingston and that would have been a much larger loss that we would have had to contend with." Roe also noted that with an event like this some global insurers who have small shares in Caribbean insurance will back out - which could also drive up prices.
