Barbados Struggles with Rising Insurance Costs

A tranquil scene in Barbados. Photo by Kathryn Maingot on UnSplash.

Introduction to the Problem

Prime Minister Mia Amor Mottley says rising insurance costs are making it harder for businesses to survive and prepare for climate change. She says this is a big problem, especially for tourism businesses.

Speaking at a recent meeting in Barbados, Ms. Mottley said she had talked with small hotel owners about the high cost of insurance. These businesses need money to upgrade their buildings and stay competitive, but the high insurance costs are causing losses. That makes it hard to get loans or new investment.

The Risk to Barbados

She explained that this is a serious risk for Barbados. If a business or country can’t get insurance, then it also becomes hard to get investors. She said this issue has been a concern since 2019.

To help, the government created a new Resilience and Regeneration Fund. This replaces the old Catastrophe Fund and was announced in the 2025 Budget. The new fund builds on earlier steps, like natural disaster clauses in government bonds. These clauses let Barbados pause debt payments after a disaster so it can use the money for recovery instead.

Economic Implications

Ms. Mottley said these changes gave Barbados extra room in the budget—equal to 17 to 18 percent of its GDP over two years.

She said the country often has to plan economic activities like festivals around the risk of disasters because it cannot afford to cancel them.

International Support

The Prime Minister also said the Loss and Damage Fund, created after COP27, is vital. It gives financial help to poor countries hit hardest by climate change.

She added that if rich donors and world leaders are needed to move the fund forward, Barbados would be glad to host those talks. But she warned that without cooperation and new ideas, countries like Barbados could suffer because others do not support their cause.

Source: Barbados GIS.

Conclusion

The rising insurance costs in Barbados pose a significant threat to the country’s economy, particularly the tourism sector. The government’s efforts to establish a Resilience and Regeneration Fund and the international community’s support through the Loss and Damage Fund are crucial steps towards mitigating this risk. However, cooperation and innovative solutions are necessary to address this issue effectively.

Frequently Asked Questions

Q: What is the main issue facing Barbados according to Prime Minister Mia Amor Mottley?

A: The main issue is the rising insurance costs, which are making it harder for businesses to survive and prepare for climate change.

Q: What is the Resilience and Regeneration Fund?

A: The Resilience and Regeneration Fund is a new fund created by the government to replace the old Catastrophe Fund, announced in the 2025 Budget, which aims to help the country recover from disasters.

Q: What is the Loss and Damage Fund?

A: The Loss and Damage Fund is an international fund created after COP27 to provide financial help to poor countries hit hardest by climate change.