To Need and Not Have . . .

A look at insurance in the face of disaster.

By Craig Archibold, Account Executive, Property & Casualty, NW Hamilton Insurance Services Ltd.

As I reflect on the events of the unprecedented 2017 hurricane season, I found myself in deep consideration of an old saying my mother would always say to us as children, “Better to have and not need, than to need and not have.”

As an insurance professional, I understand this as a modern thought that was in some way ahead of its time. Our society has grown tremendously over the past 30+ years and today’s economy has come with major financial commitments and personal investments that demand a wise approach to managing our risk associated with hurricanes and other natural catastrophes.
To need and not have is a great motivation for us in the Turks & Caicos Islands. There is truly no greater security to your property investments in the TCI than insurance. As a community, the instrument of insurance must become a part of our vernacular as a tool in managing risk and protecting our hard-earned assets—and not simply thought of as an enforced mortgage requirement and expense.
Insurance is the antidote to the “need and not have” dilemma. It is not a scheme or a proverbial money pit; something that you pay into, but get nothing back from. Some invoke such talking point with no experience of an unfortunate event that threatens personal investments accumulated in the short or long term. Insurance has been tested and tried for centuries as the ultimate security fix to an unknown financial loss. It is in fact a valuable tool in your pocket to protect your interest and more than a bank-required instrument of security.

Reports of the CDEMA revealed that only 14% of total houses damaged in TCI had home insurance that covered disaster risk.

Throughout centuries, insurance has been proven to be a tool and security feature to safeguard assets. In 1601, the first insurance legislation was enacted in the United Kingdom; coverage for merchandise and ships has its roots in this law. It was necessary to make arrangements and plan contingencies to ensure that merchants did not lose all their investments tied up in cargo and ship owners did not lose their source of wealth if their ships went down and were taken by the sea. With the increasing demand for ship and cargo insurance, Edward Lloyd’s Coffee Shop became recognized as the place for obtaining marine insurance; this is where “Lloyd’s” that we know today began.
Although insurance in London began with Lloyd’s of London, the methodology of pooling the reserves of many to pay for the claims of few was recreated throughout financial corporations, who took insurance out beyond marine and cargo insurance. In today’s insurance industry, most types of insurance can be sourced and the models established globally are centered on this shared principal objective—the belief that there is strength in numbers, a joint force against all kinds of calamities including financial troubles.
In 1688, the home insurance industry would be established, ushering in a paradigm for other lines of insurance cover. The types of insurance available in the modern insurance market are wide and varied. However, general insurance underwritten by insurance companies is typically restricted to mainstream insurance such as: commercial property, household/homeowner’s, liability and motor insurance. Household (property) insurance is a personal line of insurance, however in much the same way, commercial property is covered against the risk of fire, flood, storm, theft, malicious damage and accidental damage.
When pursuing the purchase of insurance there are a few considerations. One would be to know your asset value and imagine for a brief moment how losing it with no recourse for restoration would impact you financially. The concept of insuring and having adequate coverage is often misunderstood and to a large degree taken for granted. The disproportionate nature of underinsuring your property comes with great financial exposure. A guide to recover from such potential crisis would be to consult a qualified evaluator for property evaluation. This puts you in a strong position of understanding your property’s worth as it seeks to establish the replacement value of your property consistent with current market trends.
With property values in the Turks & Caicos among the highest in the region and the daunting cost of construction to replace assets, conventional wisdom demands having added security against property loss and business interruption. The need to have insurance has become a must-have. Policies such as homeowner’s and commercial property insurance are the leading coverage in our local industry.
The meteorological predictions for the 2017 hurricane season anticipated that the season would bear much activity. With the reality of major storms Ike, Hanna, Irma and Maria within the past nine years, the Turks & Caicos Islands are still processing and grappling with their aftermath, although the road to recovery has been rapid. Our community has learned that “to need and not have” is no longer an option to avert a financial loss. With the devastation of homes, businesses and infrastructure occurring in hours, even with sufficient warnings, our best construction, best intentions and every conceivable precaution, the force of nature is overwhelming and destructive.
We must recognize the catastrophic nature of hurricanes and the devastating after-effects they have both financial and emotionally. We believe that communities at large are better served when they make the necessary preparation to mitigate loss during such times. The tempests know no bounds and destruction therefore is not confined to any particular demographic, economic or cultural class.
Whether you agree with the arguments for climate change or not, the earth is warming and the noticeable differences in weather patterns continue to escalate, producing peculiar natural disasters around the globe.Hurricanes remain a great threat to the Turks & Caicos Islands and the region. It is incumbent that we lobby for changes or affirm policies in our building codes and hope that the relevant government agencies oversee the proper construction of neighboring buildings; the absence of such oversight, however, will not negate our responsibility to insure our properties.
The insurance industry in the Turks & Caicos Islands is well regulated and thus far has made good on its claims in Hurricanes Ike and Hanna (2008), and the recent double whammies of Hurricanes Irma and Maria. The Financial Services Commission has always been proactive in its obligations to see that those operating in the industry are solvent and are sufficiently reinsured.
The experience from the recent hurricane events, and in particular their effects, provides a plethora of lessons to compel rational minds that threats are no longer probabilities but rather reality for the foreseeable future. Destruction can be self-imposed and in most cases beyond human control in the context of a natural disaster. This gives more reason than none to better prepare ourselves to mitigate a potential loss during any unfortunate catastrophe that comes with warning and unforeseen circumstances. I believe that this can only be achieved by having appropriate and adequate insurance coverage and heeding the warnings established through official government and private agencies to protect us from financial vulnerabilities, because it is better to have and not need, than to need and not have.

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South Caicos was once a major exporter of salt harvested from its extensive salinas. Award-winning Master and Craftsman Photographer James Roy of Paradise Photography ( created this vertical composition by assembling a series of six images captured by a high-definition drone which was a half a mile away from his position.

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