Waiting on the next rainy season

Within days, we will be coming to the official end of the hurricane season. The region will breathe a collective sigh of relief until next year when we go through the same anxieties all over again whenever the weather forecasters advise us of the formation of an area of disturbance or a system that is approaching that has the potential to develop into a tropical depression or worse. This hurricane season has changed the lives of many of our Caribbean neighbours forever and it will be many years before some of the affected islands get back on their feet. For them this might be a lost decade. The twin island Republic of Trinidad and Tobago can consider itself comparatively lucky so far to have been spared the ravages of hurricanes and earthquakes.

However, we were not so fortunate when two weeks ago Tobago suffered severe flooding and only last weekend it took less than 1 hour of heavy rain to cause havoc to several parts of Trinidad – the East/West corridor, South and Central where flooding occurred more than 24 hours later as the rivers were swollen and unable to handle the volume of water. In the USA, flood is generally not covered by  the insurance industry as there is a mechanism in place through the flood insurance program managed by FEMA. Flood is a regular occurrence and widespread devastation takes place when rivers cannot handle the rising water levels. In Trinidad and Tobago and the English-speaking Caribbean insurance policies largely follow the English tradition and therefore insurance coverage against flood is usually included in the package and not viewed as a natural catastrophic peril – at least not until now!

Wake-up call
The first real wake-up call was a couple of years ago when there was widespread flooding in early November along the Churchill-Roosevelt highway from Nestl? through Valsayn all the way to Macoya. Losses ran into tens of millions of dollars and that area is now so red-lined as a flood prone area that businesses could only obtain coverage against flood at an increased premium and more importantly they had to bear an excess in some cases as high as 5 % of the sum insured — more than double the excess applicable to hurricanes and earthquakes. A similar pattern is emerging where flood insurance is now under the microscope and no longer will excesses remain low but rather it is likely to fall into the same category as other natural catastrophes where the excess is 2% of the sum insured — a $500,000 property will have to suffer at least $10,000 in damage before insurance cover will kick in.

Already there are well known flood areas that suffer perennially as if nothing could be done especially the low lying areas. However, these have been mainly agricultural or where properties are generally not insured and therefore while the victims are traumatised the insurance industry is not significantly affected as the payout is negligible. Within the recent past, areas that are not known to flood and where most properties are insured there have been instances of flooding and therefore the insurance industry is now concerned over this developing trend. Moreover, the commercial heart of the country and, in particular, the cities of Port-of-Spain and San Fernando are now being affected by flooding whenever there is a moderate shower as the drains are either clogged or inadequate to take the water.

Withdrawing cover
Businesses are therefore claiming on their insurance policies and the insurers are reacting by increasing premiums and excesses and in some instances withdrawing cover totally if in their opinion the risk of flooding has become a certainty. The rains on Sunday fell for less than an hour and yet there was flooding in Port-of-Spain and wide tracts throughout the East/West corridor causing one death and considerable damage to property as well as landslides.

Drainage or lack therefore will challenge the insurance industry as it is clear that the problem is beyond solution as there must be the will to address the problem as well as significant capital expenditure which may well be beyond the capacity of the country. We are good at talking and doing nothing and we can  find all kinds of excuses why flooding takes place. It is true that the population at large contribute by neglecting the environment, indiscriminate dumping into the watercourses, slash and burn and probably the most disturbing – housing development that appears unplanned without considering the implications for persons living below in terms of the run off of water.