Final Word from Tuesday, August 27, 2002
The floods this year in the CR are sometimes compared to the terrorist attack in the U.S. last year. The comparison usually falters, but there is at least one similarity. Insurers are using the floods to prepare the public for higher premiums, just as they did after the attack. The problem, local insurers say, is that the CR has been hit by "100-year" floods twice in five years, which makes reinsurers nervous. Analyst Mojmír Hampl of Česká spořitelna forecast that reinsurers will cover about 60% of the estimated Kč 20bn reimbursed by insurers. CEO Ladislav Bartoníček of Česká pojišťovna said in Euro that reinsurers could have to pay as much as Kč 20bn. This means much higher future rates. The only way forward, he argued, is to change the system. One possibility, he said, is to require everyone to buy flood insurance, even those living on a hill.