Tuesday, September 12, 2017
By NEIL HARTNELL
Tribune Business Editor
Bahamian Chambers of Commerce are seeking to develop a hurricane insurance “package” for small businesses, with around 50 per cent of Grand Bahama firms expressing “interest”.
Mick Holding, the Grand Bahama Chamber of Commerce president, told Tribune Business that the initiative was designed to improve “accessibility and affordability” for small and medium-sized enterprises (SMEs) when it came to property and business interruption insurance.
Mr Holding, who is leading the initiative in conjunction with other island Chambers, said he aimed to engage Bahamas-based insurance carriers on the initiative next month in a bid to drive it forward.
With Hurricane Irma’s trail of destruction throughout Florida and the Caribbean providing renewed impetus, Mr Holding said the Chambers hoped to persuade the insurance industry about the merits of such ‘volume’ or package coverage for multiple firms.
“It’s something we’ve been looking at for some time now, and some of the other Chambers of Commerce throughout the Bahamas are joining us,” he said of the proposal.
“It is basically to see whether we could get a small insurance package together for Chamber members who currently can’t carry insurance coverage because of affordability issues, and see if we can talk to the insurance companies and out together a Chamber of Commerce package that will be more affordable.”
Mr Holding continued: “It’s accessibility and affordability, not necessarily just for property and casualty, but business interruption because a lot of businesses after Matthew didn’t particularly suffer any material property damage.
“For a variety of other reasons - communications, the knock-on effect from other businesses that were hit - these companies were unable to open, yet still had a payroll to meet. So we’re looking to put together a business interruption insurance package.”
Insurance penetration throughout the Bahamas falls the further you travel from Nassau, with the negative consequences brought home in Hurricane Joaquin’s aftermath in late 2015.
Few businesses in the Family Islands were insured, and many of those who had coverage were under-insured. This left many companies struggling to re-open in the storm’s aftermath, leaving them reliant on funding from initiatives such as Rebuild Bahamas and prolonging the economic recovery from Joaquin.
The relatively high cost of insurance has also priced much coverage out of SMEs’ reach.
Mr Holding told Tribune Business that a survey of Grand Bahama Chamber members had exposed “a great deal of interest” in the insurance ‘package’ proposal, indicating the issue was “very important” to the private sector.
He acknowledged that the initiative had not progressed “as far as I’d like to have got by this stretch”, and added: “We haven’t got a product to deliver yet, but there’s a great deal of interest in affordability of coverage throughout the Bahamas.
“While we may be leading it, it’s not exclusively a Grand Bahama Chamber of Commerce initiative. A number of insurance carriers I’ve spoken to have expressed an interest in looking at it further.”
There may be common ground between the Chambers and Bahamian insurance carriers on this issue. Emmanuel Komolafe, the Bahamas Insurance Association’s (BIA) chairman, told Tribune Business on Sunday that the BIA was in initial talks with unnamed “multilateral and regulatory agencies on the introduction of microinsurance” - a product “designed to increase insurance penetration and serve the low income” as well as SME sector.
Pledging to focus on the initiative when he returns from vacation next month, Mr Holding said: “It’s one of the things I’m going to try and do; get the carriers in and show them the level of interest, size of the business and level of coverage.
“Don’t look at this as individual businesses,” he said of his message to the insurance industry. “It’s one big business. What package can you put together for us?”
Mr Holding told Tribune Business that “something of the order” of 50 per cent of respondents to the Grand Bahama Chamber survey had expressed an interest in the catastrophe/business interruption insurance package.
“It’s probably fairly representative of the business community as a whole,” he added.
Mr Holding suggested that several storm-free years had created complacency among some businesses when it came to hurricane-related insurance.
When inquiring whether companies had insurance in Hurricane Matthew’s aftermath, the Chamber chief said those that did not frequently explained that they dropped coverage because they felt the premiums were “not worth it”.
However, few set aside the monies saved by not paying the premiums, inhibiting their ability to self-insure and recover from storm-related damage.
“There’s a mindset there, particularly when you’ve had several hurricane-free years,” Mr Holding said. “People say: Why should I pay these insurance premiums because I don’t benefit from it. If they’re going to self-insure, they need to put money to one side to meet claims when storms do come. It’s part of an education process.”
The Grand Bahama Chamber chief revealed that the private sector was looking at similar “package” schemes for health insurance and pensions, enabling “these smaller businesses to at least have the opportunity for something they can afford”.