Kuwait has witnessed over the last few years natural catastrophic damage in the winter caused by heavy rains and floods that resulted in huge losses because of damage to private property, cars and others, in addition to a steady rise in summer temperatures that caused losses due to vehicles catching fire, electricity short circuits, power outages and fires in some areas and buildings.
Addressing these situations, insurers try to develop new products as traditional products are too limited in dealing with the risks, reported Al Qabas.
Mr Khaled Al Hasan, president of the Kuwait Insurance Federation and CEO of Gulf Insurance Group, said insurers are keen to develop new insurance products noting that there are no specific measures to predict the occurrence of natural disasters, most of which occur suddenly.
As a result, risk managers in insurance companies are forced to spread and distribute risks geographically in order to minimise overall losses.
Role of the state
Mr Al Hassan added that although Kuwait is still considered in a safe zone in relation to natural disasters in general, the basic rule is that no country is immune to the consequences of climate change.
While individual insurers per se will not be able to bear the burden of economic and social disasters due to climate change, the insurance sector certainly plays a leading role in addressing these disasters and compensating those affected.
The government can play a role in supporting the insurance sector through the following regulatory measures:
- Ensure sufficient capitalisation of insurance companies and their ability to absorb risks resulting from natural disasters through reinsurance agreements;
- Enact laws to make mandatory property insurance against natural hazards such as floods and earthquakes; and
- Work with global consultants and the insurance and reinsurance sector to study flood-prone areas, map them, determine their degree of vulnerability to these disasters, and accordingly re-plan waterways, protect infrastructure and residential areas and tighten control over contractors in construction and periodic maintenance.
“Moving to an environmentally friendly society is no longer a desire, but a necessity for our survival, and there is no alternative,” Mr Al Hasan said.
Mr Nasser Al Omar, vice chairman of Gulf Takaful Insurance said, “The problem is not with the insurance products, but with the lack of insurance awareness.”
He said the government should give the insurance sector a bigger role and to remove the burden on tax coffers of losses suffered from natural disasters. With government-owned buildings and infrastructure currently not covered by Nat CAT insurance, Mr Al Omar asked, “How long will government facilities and the infrastructure of the country remain uninsured?” M