Barbados Prime Minister Warns of Rising Insurance Costs and Climate Risks

Prime Minister Mia Mottley on Wednesday issued a stark warning about the existential challenges facing Barbados and other small island developing states as they grapple with soaring insurance costs, escalating climate risks, and global inaction on the climate crisis.

She told the fifth board meeting of the Fund for Responding to Loss and Damage at the Hilton Barbados Resort these escalating costs were making it increasingly difficult for industries to remain competitive.

“We find ourselves today in a world that is in conflict with itself, unable to halt the inevitable consequences of the worsening climate crisis,” Mottley said, underscoring the broader global instability and the growing risks for vulnerable regions like Barbados. She pointed out that, for the island, the unpredictability of climate-related events has already disrupted several industries, leaving both businesses and the government to grapple with uncertainty.

She specifically addressed the severe impact of skyrocketing insurance premiums, which threaten the financial stability of the hotel industry.

“One of the last questions posed to me by the Intimate Hotels of Barbados, a group representing 44 hotels and over 1 000 employees, was about insurance and the steep increases they face,” Mottley said, emphasising the risk of these increases causing businesses to face financial loss, hindering their ability to secure new capital or remain competitive.

This growing uncertainty around insurance is compounded by the shifting nature of climate-related risks. The prime minister referred to the 2024 ICC Men’s T20 World Cup, which took place amid the threat of Hurricane Beryl.

“If it had simply been a national or regional final, we may well have put it off. But given the international rules, we went ahead while preparing the country for the worst,” she noted, reflecting on the challenges of managing risk in an environment where future events cannot be predicted with certainty.

In response to these mounting risks, Mottley said her administration had introduced the Resilience and Regeneration Fund to address gaps caused by underinsurance.

“A dollar spent on building resilience could save $5 to $7 in damage,” she stressed, pointing to the importance of proactive investment to manage uncertainty in the face of climate-related risks.