Fiji has a reasonably small premium base of only $160 million, (including Term Life and Medical of $20 million), therefore not providing enough of a pool required to soften the blow when extreme events are faced.
This was highlighted by Lolesh Sharma of the Insurance Council of Fiji, at a recent stakeholder’s seminar on policies, regulations and consumer concerns related to property insurance in Fiji.
He noted that the Nadi floods in 2009 cost the insurance industry $50 million, and a total of 41 percent of premium income, whilst Tropical Cyclone Winston in February this year cost $115-$250 million, about 85-130 percent of total premium income.
“Fiji has its specific challenges, and these are namely its closeness to the Pacific Ring of Fire, the constant threat of tropical cyclones for at least six months of the year, political instability over the last 30 years, inconsistency in the implementation and policing of the National Building Code and largely uncharted or modelled country, and thus many unknowns,” Mr Sharma pointed out.
He said Fiji’s insurance industry was not immune to international best practices, via its reinsurance contracts with the international markets.
“Insurance is provided for uncertain events. If events occur far too regularly and there is not enough of a premium pool to support it, it is excluded. Examples include the peril of earthquakes in the State of California, US, the peril of floods in Thames Valley, New Zealand, and the peril of flood in Nadi and Ba.”
Source: PROPERTY (FIJI) LTD