It is important to promote natural disaster insurance

Disaster loss and damage are on the rise in Uganda with grave consequences. These disasters also erode Uganda’s hard-won development gains. At hand currently are the floods ravaging different parts of the country. In the recent past, floods also ravaged Kasese and landslides buried villages in the Mt Elgon areas, especially Bududa where many people were displaced.

Each time there is a natural disaster, people appeal for help and the relevant government departments make promises but nothing seems to bear fruit.

A case in point is the Bududa landslide. I’m a strong proponent for a move from heavy reliance on government assistance to natural disaster insurance cover. However, people have not fully embraced natural disaster insurance.

The biggest worry to insurers is that the catastrophe might occur too soon before the insurers collect enough premium to compensate, thereby putting the insurers at the risk of insolvency.

A number of insurers argue that disaster losses are not insurable. Such risk is considered bad, unpredictable and beyond the control of anyoneinstitution. The other reason is uncertainty due to the absence of historical data and the present imperfect scientific knowledge.

This notwithstanding, reinsurance should be encouraged and developed to act as a cushion to the insurance companies that offer natural disaster insurance cover.
Lou Jarvis Owen,
jlou@mmaocates.com

SOURCE: Daily Monitor

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