The Tribune

EDITOR. The Tribune.

Chester Cooper’s headline story in The Nassau Guardian on September 18, 2017, “Government wasted money”, is concerning.

In a nutshell, Mr. Cooper is quoted as saying that an “egregious and expensive error” was made when government decided to renew the Caribbean Catastrophic Risk Insurance Facility (CCRIF) policy that the former administration dropped.

Cooper said because the government will only receive a payout of $234,000 after paying an annual premium of $2.6m, The Bahamas will lose out.

Let’s put aside for now that he is an elected Member of Parliament and focus on the fact that he is an Insurance Company Executive. In either role, he should understand the basic principles of insurance; a mitigating control to guard against risk. If Insurers and/or the insured can determine with any proximity when there will be a loss, they will only purchase insurance for this period as to pay for any other period would be an unwise investment. The facts are that, except for God, no one, including the best meteorologists, and as seen with Hurricane Irma, has the foresight to determine week or months in advance exactly when and/or where a Hurricane loss will happen and/or the magnitude of the loss. What they can predict several days is with a relative degree of certainty, the areas that fall within a cone and the countries likely to be impacted and when, and closer to the actual event, the areas likely to be impacted.

Mr. Cooper’s comments suggest that given the magnitude of the loss, that the Bahamas Government’s decision to safeguard against the risk of hurricanes was not a wise spend of scarce resources. Every citizen and/or business that purchases insurance in advance and does not experience a loss may probably feel this way; however, the very nature of insurance is to safeguard against potential risks and charge a premium for the likelihood that this event will happen. If it is known with any absolute certainty that an event will happen resulting in a risk, the insurers will likely apply a premium of at least the projected loss plus their spread.

Doing nothing or not purchasing insurance, whether by Government or private sector is not a good risk management strategy. It is not a responsible comment and the naïveté of the comment indicates a focus on politics and not business, let alone the business Mr. Cooper is in - selling insurance.

CONCERNED

Nassau,

September 18, 2017.