Jamaica Could Face Abaco Islands’ Plight if More Don’t Insure

Nearly five years after Hurricane Dorian devastated the Abaco Islands, the aftereffects of the catastrophic disaster remain evident.

On September 1, 2019, Hurricane Dorian made landfall on the Abaco Islands and the Grand Bahamas as a category five hurricane, the strongest and costliest hurricane on record to affect the Bahamas. The hurricane resulted in the deaths of 63 people in the Abaco Islands and 11 in Grand Bahamas, with at least 282 people unaccounted for. The loss and damage associated with the hurricane was estimated at US$3.4 billion

Thomas Smith, Managing Director of JN General Insurance, who visited the Abaco Islands in March this year, observed firsthand the lingering impact of the hurricane following his tour of several communities.

“While a lot of the tourism-related businesses are back up, many small business buildings haven’t been repaired and some infrastructure is in disrepair.  Some homes have roofs covered with tarpaulins and some have windows that are still battened up even though people are living in there,” he related.

A seasoned insurance expert with more than 45 years of general insurance experience, Mr Smith highlighted that the lack of adequate insurance coverage among many residents has significantly hampered their ability to rebuild their homes and businesses.

“People who I spoke with, who haven’t recovered, bemoaned the fact they didn’t have enough insurance or didn’t have any at all,” he said while drawing a sharp contrast with business operators he engaged with who were adequately insured.

Mr Smith also shared that many people told him the hurricane was so intense they feared for their lives.

“A category five hurricane is an incredibly powerful and destructive storm. The sheer terror they experienced is something that is likely to stay with them for a long time. Rebuilding their lives not only entails restoring physical structures, but also recovering from the trauma of such a tragic event.”

He stressed that the frequency and severity of hurricanes are increasing due to climate change, and that the trend poses a growing threat to countries in the region.

“Living in this region where hurricanes and other natural disasters, such as earthquakes are a recurring threat, having adequate insurance coverage is a necessity,” Mr Smith emphasised. “Insurance coverage provides the necessary funds to repair and rebuild thereby enabling quicker recovery and helping individuals and businesses get back on their feet after a disaster,” he added.

The forecast provided by the Tropical Weather and Climate Research team at the Colorado State University is that there will be 23 named storms, including 11 hurricanes, five of which are expected to range from category three to five making this season to be an extremely active one.

Mr Smith expressed concern that with fewer than 50 per cent of homes in Jamaica insured and with several underinsured, the direct hit of a hurricane could result in a disaster similar to the Abaco Islands.

“A major hurricane can result in significant financial loss if a home is damaged by strong winds or by flooding. Restoration cost could easily run into millions of dollars which can be a major strain for the average homeowner.” 

Addressing the issue of underinsurance, Mr Smith emphasised the importance of proper valuation.

“Accurate property valuations are crucial for determining the right amount of insurance coverage.  It is imperative that homes and businesses are insured for their replacement value. The replacement value of a property changes over time due to improvement projects undertaken and by inflation in construction costs or materials. This can lead to significant gaps in coverage leaving persons vulnerable in times of a crisis,” he remarked.

Mr Smith advised that in lieu of a valuation report, persons may opt to use a less expensive report from a qualified property loss adjuster, who provides insurance valuation services, to determine the replacement value of their property.

“Conducting a regular audit of your insurance policy will ensure your coverage is up to date and that your property is fully covered in the event of a loss caused by a hurricane or other insured perils,” Mr Smith stressed.