The devastation of the recent earthquake in Haiti is not only an emotional challenge for those involved; there is now also the logistical discussion about insurance coverage in the area, which will make up some of the monies available for rebuilding shattered lives.
"Haiti is one of the smallest insurance markets in the Americas" and U.S. insurers may have very little exposure to the losses caused by the earthquake, according to MSNBC. Haiti's total non-life insurance premium income is only about $20 million, in comparison to U.S. coverage in 2008 at $441 billion according to the Insurance Information Institute's 2010 Fact Book.
These numbers "'reflect the country's poverty,' according to a report Wednesday from from Newark, Calif.-based Risk Management Solutions, Inc." (MSNBC). It is estimated that if there is property and casualty insurance business in Haiti, it is only about 0.3 percent of the country's gross domestic product, according to Jackie Barber, Risk Management Solutions' director of corporate marketing. Haiti is the poorest nation in the Western Hemisphere, with an annual government budget of just over $1 billion dollars. In comparison, Bill Gates could personally fund the Haitian government with the interest on his fortune and still have several billion left over each year.
Damage estimates from Haiti's terrible earthquake are not yet available. Yet, it appears that U.S. insurance companies will not be in the position of having to pay massive amounts to Haitian victims of the earthquake, regardless of what the final bill might be. The insurance policies were never taken out by residents or businesses, obviously because the people of this poor nation could not afford disaster coverage.
German reinsurer Hannover Re estimates a €20m payout for the Haiti quake, though it didn't immediately give the nature of its loss, Dow Jones reports.
Robert Hartwig, president of the US Insurance Information Institute, said: "Insured losses will be minimal, despite the severity of the event. The reason is that Haiti is one of the poorest countries in the world, with very little private insurance."
Most private insurers will pay little in claims, because the private insurance market is almost non-existent in developing countries such as Haiti.
Tom Larson, senior vice president of catastrophe risk modeler Eqecat said that he does not expect insured Haiti losses to create a major loss for any one international insurer.
"For this type of event, no one insurer has any kind of large exposure," Larson said. "One insurer might have lost everything they have insured in Haiti in this one event, but we don't expect it to be a major event to any one of them."
This underscores the importance of aid to Haiti, as many companies, and millions of individuals continue to give.
