Governments need to make strategic investments in disaster resilience to save taxpayers dollars and protect citizens.
This is according to Brad Kading, president of the Association of Bermuda Insurers and Reinsurers (ABIR), speaking at the Northeast Risk and Resilience Leadership Forum.
He said that governments are in a unique position, which enables them to write and enforce standards which will make communities and homes safer and restore wetlands or dunes to absorb hurricane wind and waves.
“Governments should focus on land use planning, infrastructure, building codes, and enforcement. Let private insurance markets work to deliver risk signals with prices. Assigning a price on risk boosts investments in storm proofing. Put a stop or a ‘red-light’ on subsidising insurance costs for those that can afford to protect themselves,” said Kading.
Research from the University of Pennsylvania Wharton School reported that for every $1,000 of disaster aid, consumers purchase $6,400 less of flood insurance, which Kading said was proof misguided government programmes.
“Humanitarian disaster aid is necessary, but aid that is encouraging consumers to avoid common sense insurance purchases is counterproductive and, as research documents, will contribute to a never ending spiral of government disaster payments,” he said.
“We know that for every $1 spent on hazard mitigation, $4 is saved. Let’s figure out what the right incentives are to encourage the purchase of catastrophic flood, wind, and earthquake insurance, and then carefully target disaster aid to humanitarian and smart infrastructure improvements.”
He gave the example of wetland restoration, which is incredibly important in acting as a shock absorber for hurricane wind and waves. Kading said it was documented that wetlands provide an annual $23 billion in protection from hurricanes and therefore this is the smart infrastructure that governments must direct their investments towards.
ABIR, Brad Kading, Bermuda, North America, Disaster Resilience