The implementation of natural disaster and pandemic clauses in the wake of a disaster are critical to a country’s recovery post impact.
“There is no amount of insurance money, there is no amount of aid, that is going to be able to supplement the needs of a country in the fighting of a major disaster,” said Prime Minister Mia Amor Mottley.
She made this assertion as she delivered the keynote address during the 12th bi-annual Comprehensive Disaster Management (CDM) conference at the Savannah Beach Hotel, recently.
She was speaking on the topic: CDM Road to Resilience: Check Point 2022-Advancing a Risk-based Multi-Hazard Approach during COVID-19 and beyond.
Ms. Mottley explained that in the event that Barbados suffered a disaster of a certain portion as determined by the Caribbean Catastrophe Risk Insurance Facility, the natural disaster clause would immediately suspend all the country’s debt payments for two years.
That, she said, would create the fiscal space needed to facilitate the recovery effort, and equated to 18 per cent of the gross domestic product (GDP).
“There is no country, no company…that will give us the equivalent of 18 per cent of GDP should a disaster happen,” she outlined.
Ms. Mottley further pointed out that having such clauses was important because the cost of insurance had outpaced the capacity of companies and individuals to pay.
“There is regrettably too high a percentage of under insurance in this region, and it is going to have wider implications for economic growth, because if you can’t afford the insurance, it constrains your capacity to constrain bank financing for your business,” she said.
She encouraged other Caribbean countries to appreciate the fact that what was missing in terms of official development assistance, and adaptation funds, could only be compounded by the absence of natural disaster clauses.
Therefore, the Prime Minister stressed, there must be a concerted effort to create the inclusion of natural disaster clauses in financial instruments within the Caribbean Community as a basic foundational principle.
Ms. Mottley noted that while there was an agreement to establish the Loss and Damage Fund, it was “nothing more than a promissory note”.
“It is now up to us to ensure that we, with dispatch, create the structures to determine how best the fund would be structured, how it would be funded and who will benefit from it,” she said.
However, she charged that the Loss and Damage Fund should not only be capitalised by countries who contributed to the worst aspects of greenhouse warming, but also include companies whose conduct caused serious damage.