Tuesday, October 19

Home insurers gain popularity among canaries after the ravages of the La Palma volcano


Home insurers are already beginning to notice an increase in interest in the Canary Islands for insurance from home after the La Palma volcano eruption. Companies such as Mapfre or AXA, among the most established in the Archipelago, acknowledge that the flow of calls has increased in recent days by dozens of families from the Islands, the autonomous community with a lower percentage of insured homes, according to the latest report annual of Unespa.

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The explosion of the La Palma volcano, which has already destroyed nearly 1,000 buildings, has underlined in the minds of the Canaries that only homes with private home insurance are covered by the Insurance Compensation Consortium, a public body that works as an insurance company against damages caused by extraordinary events, such as floods, earthquakes, tsunamis or, in this case, volcanic eruptions.

In the Islands there would be a wide margin to extend this type of contract. According to data from the Spanish Union of Insurance and Reinsurance Entities (Unespa), 46.95% of Canarian families have their home insured, with autonomy with the lowest data, far from those that lead the table: Basque Country , with 89.04%, Cantabria (85.07%) and Navarra (83.6%). The state average is 75.53%.

Logic and newspaper archives suggest a considerable surge in the Archipelago in the coming months. Faced with natural disasters, families seem to feel more vulnerable and see home insurance as a basis on which to protect themselves. It happened in the eighties, when a flood left flooding and destruction in the Basque Country, serving as a fundamental principle for its inhabitants to launch themselves to adhere to these policies. Also in Canada, after the floods in the city of Calgary, which forced the evacuation of 75,000 inhabitants.

In a 2013 study signed by North American scientists and published in the journal Risk Analysis, The authors specify that the popularity of insurance in Calgary was higher among those affected who had been evacuated than among those who did not live in a community at risk of flooding. The psychologist Azucena Duque, from the College of Psychology of Tenerife, explains that this double face makes all the sense in the world.

As a result of what is happening on La Palma, he says, the inhabitants of the Canary Islands are becoming aware of who they are and the place where they live, volcanic islands on which, although there is constant monitoring to scrutinize what is moving under the earth’s crust, lava can come out at a thousand degrees Celsius from any point. “People understand where it is and what its foundations are, never better said,” adds Duque.

The psychologist relies on what she calls “vicarious learning”: observing the behavior of others to change one’s own and, in this case, restructure our life script. Duque believes that the Canary Islands are experiencing an “emotional swarm” from a shock that first requires a phase of assimilation and then accommodation. After the impact, he points out, it is foreseeable that interest in insurance will multiply.

Insurers and their role after natural disasters

The territorial director of AXA in the Canary Islands, Manuel Trigo, defends that “insurance is a great ally in the face of problems as serious as the La Palma volcano” and that “the degree of insurance of homes in the Islands is below the average national, so there is an interest in protecting what matters most to us. ” AXA collected, in 2020 alone, 656,443 euros in premiums for home insurance in the Archipelago, according to data from the Cooperative Investigation between Insurance Entities and Pension Funds (ICEA). It is foreseeable that that number will pick up this course.

Insurance entities will be under scrutiny in the coming months not only because of the important role they must play on La Palma, but also because it is undoubted that they will inflate their income with the flood of new clients. This scenario makes some corporations uncomfortable, who admit that it would be unethical to take advantage of such a situation to grow in economic terms. However, recent history indicates that, on occasion, they have.

In Australia, according to an article published in the magazine Urban Studies In 2018, some insurers have increased their price premiums in areas prone to natural disasters or, outright, have withdrawn, “increasing vulnerability in the event of an extreme event in the middle of a climate crisis,” the authors add. work, both from the University of Tasmania.

Another study, this time published by humanist geographer Leigh Johnson in the journal Environment and Planning in 2015, suggests that the insurance industry makes use of major natural catastrophes to recalibrate policy prices in risk areas, resulting in what the expert describes as “fragmented protectionism”, that is, property of the rich is insured, while the working class must wait for local administrations to provide a network of public aid.

A titled work Privatizing climate adaptation: how insurance weakens collective and solidarity recovery from disasters, funded by the Australian Research Council (where the private sector monopolizes aid after unexpected catastrophes), it emphasizes the idea that insurers are just the latest expression of neoliberalism to strip states of their role and delegate to certain companies reconstruction tasks, something that can, they argue, further stratify society.

The authors give as an example the 2012 reform of the United States Flood Insurance Program to eliminate subsidies and impose a policy that reflects the total risk of suffering any type of cataclysm. In doing so, the value of homes plummeted, but not that of insurance, which far exceeded that of homes, leaving many houses exposed and uninsured, especially in the most deprived neighborhoods.

“These types of approaches are part of the neoliberal doctrine in which individuals position themselves as those responsible for climate change and must individually face its challenges. The insurance industry does not care about climate adaptation. It has in the profitability its main mandate “, conclude the experts.

Spain is not Australia and neither is the United States

It is no coincidence that in the Canary Islands less than half of the families have their home insured. With high unemployment rates and a median income that barely exceeds a thousand euros, there is no margin to allocate annually between 100 and 200 euros for a policy of this type. And less if, as it is widespread, it is not usually present that a natural phenomenon is going to collapse your house or, in the case of the affected neighbors of La Palma, being buried by the lava of a volcano.

But in the Canary Islands the same model is not applied as in Australia, the United States or the United Kingdom. In Spain there is greater public-private cooperation to serve communities affected by natural disasters. Apart from the compensation that families with insurance from the Consortium will receive, the national government has already approved a direct grant of 10.5 million euros for the purchase of homes and basic necessities. Also the regional Executive, which hopes to allocate six million for people with greater vulnerability and seven for affected companies, especially those in the agricultural sector. A special ERTE has also been approved for workers who have seen their activity slowed down by the eruption of the volcano.

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