Barbados needs wider insurance coverage across key sectors such as housing and agriculture to reduce the financial burden on the state after disasters, Economic Affairs Minister Marsha Caddle has warned, arguing that current protections remain too narrow despite new safeguards for credit union deposits.
During Tuesday’s debate on the Protection of Depositors Bill, which will provide insurance cover to credit union members’ savings, Caddle argued that while deposit insurance was an important step, similar protections were needed across other sectors of the economy.
“That this bill strengthens and makes insurance accessible to credit union depositors is key,” she said. “But frankly, so are all the other kinds of insurance.”
Caddle noted that countries such as Barbados, which are on the frontline of the climate crisis, continue to face challenges financing recovery efforts after disasters. She said part of the problem is the relatively low penetration of insurance across sectors including agriculture and housing.
“Whether we’re talking about reinsurance in agriculture, whether we’re talking about home insurance in cases where there may be damage to homes as a result of severe weather events, penetration of insurance is critical,” she said.
Drawing comparisons with larger countries such as the United States and the United Kingdom, Caddle said insurance systems there are often better equipped to respond after disasters because more people and businesses are insured.
“People are insured,” she said. “When you have a lower penetration of insurance, it means that the state now has to bear the cost of whatever that event is.”
She added that governments in small island states are often left carrying a significant financial burden after severe weather events because many affected individuals and businesses lack adequate coverage.
Caddle also pointed to the importance of helping Barbadians understand insurance as a tool for managing risk, even when there is no immediate return on the money paid into a scheme.
“We understand that people often think, ‘Why am I putting money into this thing that I may never see a return from?’” she said. “But that is what you call managing your risk, and it is worth it, particularly when the risk is changing and increasing and coming closer to home every time.”
Using the debate on deposit insurance as a wider example, Caddle said Barbados must find solutions to insurance gaps affecting homeowners, farmers and other sectors vulnerable to financial losses.
“We have to be able to solve the insurance issue across a range of areas,” she said, noting that disaster recovery efforts are often slowed by the scale of costs governments must absorb.
“Just like depositors need to be able to secure the money that they put in a credit union or a bank, homeowners need to be able to secure their investments, farmers need to be able to secure their investments. All of us need to be able to make sure that we are managing the risk in our lives every day.”
(SB)
