As we noted last week, the disaster in Haiti has been exacerbated considerably by the fact that the country is virtually uninsured. While it may seem surprising that the country only has a marginal amount of property insurance, it is not that unusual in countries with very high poverty rates. Even if an industry existed in Haiti, pricing would almost certainly be very high given the seasonal hurricane risk.
National Underwriter P&C has reported additional details regarding the state of the insurance market within Haiti:
Insurance penetration is extremely low at around 0.3 percent of gross domestic product. The majority of Haiti’s insured risks are situated in Port-au-Prince, and motor insurance accounts for 50 percent of all non-life premiums, RMS said.
“Haiti is the poorest country in the Western Hemisphere, and poor countries tend to purchase very little property insurance coverage,” said Robert P. Hartwig, president of the Insurance Information Institute, in a statement.
“The fact that there is very little information about Haiti’s private insurance market suggests that the market is very small—likely not more than a few tens of millions of dollars,” he added. “Consequently, private insurer losses…will be modest and will not have a material impact on global insurance and reinsurance markets.”
Although most private insurers were not exposed to damage claims related to the earthquake, a number of companies including ACE Group, Allstate, Aon, Chubb, and others have set up charitable programs to assist with the recovery efforts.