Cayman needs to enforce building codes says insurer
(Bloomberg): Climate change may add 50 percent to the storm damage costs incurred by some Caribbean nations over the next two decades, said Swiss Reinsurance Co., the world’s second-largest re-insurer. Wind, storm surges and inland flooding already cost some Caribbean nations up to 6 percent of their economic output each year. Global warming could add costs amounting to another 1 to 3 percent of output by 2030. Swiss Re said territories have a range of options open to them to reduce the risk of damage. The Cayman Islands could “cost-effectively avoid up to 90 percent of expected losses” by building sea walls and enforcing construction codes, the re- insurer said.
Category: Business
Why hasn't the Caymen Island adopted the current ICC 2012 codes including fire codes? Caymen come into the 20th century
The sad reality in Cayman as noted in a previous post is that by adding expensive hurricane protection to your house all you do is increase the cost of your insurance premiums which are based on the cost/value of your house. The only way to beat the insurance companies is to self-insure if you are able.
It is a sad fact that there is no real assessment or underwriting of catastrophe risk in Cayman – either at the direct or reinsurance level. Cayman property is treated the same regardless of where it is located or the protection steps taken by the owner. Everyone pretty much gets the same per mil premium rate.
I agree with the writer who says his insurance company gives no credit for hurrricane protection efforts. Having (expensively) made my current house as wind and flood resistant as possible, my insurer’s suggestion was simply "increase your deductible" as the way to reduce the premium!
If insurers can charge health insurance premiums based on risk, eg smoking, alcohol consumption, etc, surely they can do so for property cover.
Cayman property will become uninsurable soon, especially if there is another major storm in this decade. This is not a question of becoming too expensive (statistically it is probably too cheap at the moment) but rather completely unavailable.
Insurance is a racket.
Always has been, always will be.
Well don’t buy any.
whatever… i would love to see where cayman would be now if it was not for the insurance pay-outs after ivan…..
Quite right. I recall something like US$3 billion of reinsurance monies from overseas rebuilt Cayman after Ivan and produced a wonderful construction boom and filled Government coffers (the subject for another blog!). And premiums had been paid for many years for that privilege. That is as it should be. But it does not affect the point that there is still no underwriting of specific property risk when it comes to normal homes. It is quite beyond comprehension that the per mil premium quoted by most insurers is the same for a house on the exposed South coast and a house securely protected away from the ocean. My suspicion is that it is straight laziness on the part of the insurers and reinsurers.
The insurers are cheeky cheeky thieves. Build sea walls, add hurricane shutters, protect your property…. I spend 16K on a wall, 13K on Hurricane shutters, 20K on a fixed seam roof to protect what in essence is their liability. Do I get a reduction in my premium… Er NO. It goes up because I have increased the value of the property. Why bother protecting their liability when you get nothing back?
What I find mind numbing about this article is the reference that the Cayman Islands doesn’t enforce building codes.
6 years ago we had Ivan crush much of the south side of Grand Cayman and the building codes are not enforced.
What will it take for members of government to wake up?
Actually, if you track down the report on their website and read it, it doesn’t actually say that. It woul be interesting to know the provender of the quote in teh article. Really, what the report seems to suggest is that if private individuals and government paid out a lot more money in hurricane proofing, the insurance companies would have to pay out less. Not an unreasonable request, if the insurance companies lead the way in incentivising the hurricane proofing, rather than punishing everyone with higher premiums every year.
Umm… I think you will find that the Cayman Islands Government doesn’t really fully enforce anything.
Examples:
Planning Regs (when it comes to locals)
Pensions
Health Insurance
Immigration provisions designed to protect people (both Caymanians and Expatriates) and the integrity of Cayman.
Garbage fee collection
Car window tint
The Constitution…
I must say I find this article regarding the enforcement of Building Codes in the Cayman Islands inaccurate.
The Cayman Islands Planning Department and Building Control Departments have been following building codes from the early 1990s. My experience is that the codes are very closely followed and are certainly enforced by the Building Department. I am therefore not sure what this article is referring to.
The Cayman Building Code has been adapted from the Standard Building Code of the US and modified where appropriate to suit the Cayman context. Having worked in Florida for 3 years and the Eastern Caribbean for 5 years, I can confidently say that our codes and quality of construction here far exceed both places.
It was only after Hurricane Andrew that South Florida started to protect the openings in their buildings, the majority of the residential stock being actually built of wood. Many of our structures here actually exceed our local code and even that of South Florida’s impact requirements. Obviously, our structures in excess of 20 years old were not built to a specific code however the fact that they have been around for decades is also proof that they were built well.
This article is clearly indicating that it was poorly researched and I am sure anyone who would have travelled here and asked around the industry would have very quickly learned the position stated in it is inaccurate and I certainly hope that the Government and relative departments respond to this seeing that it was in Bloomberg.
Regarding building more seawalls, that is an obvious solution to wave impact. However, this is such an obvious statement to make about any low lying Caribbean island I am not sure why it was made. As waves have been shown to reach over 30 feet, building a seawall is likely to have minimum impact overall impact. Instead of outlaying the capital cost of building a seawall, those funds might be better used in lieu of your insurance premiums or kept on deposit for repairs. After about 3 years you will be further ahead of the game.
Regarding the potential for mitigating damage from hurricanes,…. wind, impact of debris and flooding (from rain as well) are far more likely to cause damage than any concept of enforcement of codes in Cayman.
Unfortunately, I believe this article was developed to be used as a justification for higher re-insurer fees rather than for its accuracy of topic. Let’s watch and see.
Very well said Burns.
I agree – but do the regulations apply to voters? I mean, how come people are still building plywood extensions to rent as substandard bedsits far below planning requirements. If our laws and planning regulations are being enforced there will be bulldozers and fines around before a hurricane turns one of these "extensions" into a missile to destroy my otherwise compliant home? Right?
Or do you agree, we have too systems, one you and your client have to comply with, and another the man in the street can ignore with impunity?
Plywood extensions ARE actually allowed under the Cayman Building Code however I know what you mean in your reference.
Someone extending their building illegally is not likely to follow any code. Without more persons assigned to the Planning Department for enforcement or the neighbors complaining, this will continue to happen as it does elsewhere in the world.
So the effect is:
If you go to a mainstream Architect/ Engineer/Contractor Cayman has top level codes which are enforced to the full extent and you can be confident of the resultingbuilding’s integrity.
If you do it yourself or hire a guy with a mixer and a pick-up there is no effective enforcement.
I think Cayman needs to enforce its building codes for EVERYONE (and I don’t care why it does not) – the fact is there are buildings all over the place that are in plain sight of inspectors which (in my layman’s opinion) make no attempt to comply. There is even one in our financial district which has its iron roof held on in part by the weight of concrete blocks placed around the top of it. Never mind, it is only used to house foreign labour….
Finally ,finally the experts are saying it!! Build a sea wall!! Maybe when the insurance premiums skyrocket and we finally see that is the only way to stop the sea . To my dear wetland aficionados ,we will only get more win-win solutions ,such as getting rid of the pesky mosquitoes. Wouldn’t it be nice for tourist and locals alike to sit outside and not have to keep slapping continuously . God I can’t wait