The Insurance Association of Guyana (IAG), a group representing insurance companies and brokers, has decided to increase premiums for flood insurance both on businesses and households in the country. The optimist will take some comfort from the fact that the companies – which are responsible for in excess of 90% of insurance business in Guyana – did not deliver on a threat they made in November last year to discontinue offering flood insurance coverage to businesses and homeowners.
The announcement suggests that the actual increases to be publicised shortly will be temporary – until the “Industry is satisfied that meaningful action is being taken by the relevant authorities and the citizenry to correct the deficiencies” in water and flood management. The industry it seems is convinced that weaknesses in flood control compound the threats from nature attendant on the consequences of global warming. Because of its unique characteristics, the insurance industry does not operate on the strict calendar cycle and usually takes at the very least a medium term view of risks. Businesses would be advised against being too optimistic that premiums once increased will soon return to the existing levels. Indeed, if meaningful action by the unnamed “relevant authorities” is not taken and the value of insurance claims continues to exceed the premiums received, further increases in premiums will be inevitable.
The possibility cannot be discounted that increased premiums will discourage homeowners and businesses from seeking or continuing coverage or that the frequency of floods will make the risk of coverage one that the insurance companies and their re-insurers are unwilling to take. In either case, that would be regrettable and perhaps catastrophic, threatening the very existence of businesses which at least have the benefit of tax deductibility of the premium paid. The homeowner has none and is therefore at greater risk.
Flooding is now part of the psyche of Guyanese, with the spectre of an event on the scale of the 2005 Great Flood still haunting many. One of the tragedies of that Flood is that the Government refused to hold a Commission of Inquiry which would have established the causes of the Flood and hopefully made some useful recommendations to prevent a recurrence. The culture of fact finding in an open, objective forum is something that this country has abandoned at a great cost.
The IAG has largely blamed the poor upkeep of drainage facilities and the culture of dumping garbage in drains and canals as the main causes of the frequent flooding especially of Georgetown and its environs. Engineers and other experts in water management will probably argue that the problems are in fact more fundamental. Additionally, global warming causes not only rising sea levels but also more erratic, adverse weather patterns.
The drainage system designed in the early to mid-nineteenth century is gravity based. Unfortunately, over the past several decades, the system has fallen into disrepair due to neglect. Causes of the general deterioration of the system are many and the result has been an increased vulnerability to flooding of increasingly populated areas. Factors which contribute to flooding include poor maintenance, damaged water control structures, back-filling of canals, uncontrolled development and filling, and backfilling of the conservancy water storage areas due to sedimentation and accumulation of vegetation.
Older Guyanese will recall that even when Georgetown was a much smaller place and before the dawn of the era of Styrofoam containers and plastic bottles, there were far more canals and other waterways that served as holding ponds for water during the wet season and reservoirs during the dry season. East Street, Main Street, Mandela Avenue and Independence Boulevard (Punt Trench Dam) and the Railway Embankment were all active waterways. The outflows were always well-maintained, the kokers serviced on a strict schedule and the river de-silted on a periodic basis.
Though important, and for some existential, flooding is more than just insurance. Agriculture and especially rice and sugar, is carried out mainly on the coastal strip where flooding is most serious. Flood threats to this sector would have both economic and social implications with grave health threats from overflowing latrines and drains.
Ram & McRae spoke with some of the country’s engineers about solutions and it was surprising how frequently the term “not rocket science” came up in the discussions. Unfortunately everyone seems to address the symptoms rather than the causes. We were advised by one of them that the last occasion that the outfalls were dug was in 1994, twenty-years ago. He wondered how many persons actually understand or are aware of the network of canals and drains leading out to the river and the sea.
Another suggested that what was needed was a study of water flows on the coastal belt, and other areas prone to flooding. The country needs to build a database and have reliable systems for predicting the weather, informing when the holding areas should be emptied in advance of expected rainfalls. The recommendation was that drains and canals should be cleaned and maintained not as an event but on a continuous basis.
Ram & McRae believes that a major workshop on Flood Control should be convened bringing together the collective experience and expertise of our engineers, including those living abroad. We are sure the insurance community of Guyana would be willing to participate. The steps agreed to may even persuade them to postpone their threats, real and justified as they may be.
