Working Paper Series: Special Edition of 2016 to 2018 Interns

disaster usually cause serious economic setbacks. Studies have proven that high insurance penetration significantly reduces or balances out these negative effects.

Policy Recommendations Acknowledging the relationship between natural disasters, the cost of insurance and claim payments, and the role of government, the following policy recommendations are made in order to increase the affordability of insurance: i. Emphasis must be placed on the strengthening of building codes, along with the institutionalization of training facilities across the region to ensure that adequate construction standards are being met. To encourage implementation of building codes, the government could grant concessions on building materials, for example, roof sheeting, nails, beams etc. It is also imperative that governments insure their facilities, for example providing insurance coverage for low income housing. Large Government portfolios may command better pricing given the volume of public property and infrastructure and its associated value. ii. Furthermore, regular maintenance of essential infrastructure must be done, and vulnerability audits undertaken to enhance resilience. Property revaluation once every two years is necessary to ensure adequate coverage after a loss event. Alternatively, once a property has been updated or improved, the home owner should inform the insurer as it is likely that the policy may need to be adjusted or the property may be under-insured. iii. The enforcement of land use controls in hazard-prone areas and the development of a thorough risk assessment study to use as the foundation for land suitability and risk mapping are critical. These maps, along with the gradual relocation of assets and residents from hazard-prone areas, may reduce an island’s predisposition to natural disasters and reduce its vulnerability to climate change. The enhancement and maintenance of drainage is also critical to reducing landslide and flooding incidents.

192