In the wake of so many damages and disasters suffered as a result of recent storms, the government is focused on creating a permanent fund to respond to natural catastrophes (including earthquakes).
In interview with Público today, touching on a number of issues connected to the government’s storm response, finance minister Joaquim Miranda Sarmento has conceded that it is time to “strengthen instruments of prevention”, so that natural disasters do not always fall on ‘public accounts’.
As he explained, even if a country activates European Mechanisms (like the Solidarity Fund), these only ever pay a proportion of requirements.
With extreme weather phenomena part of our ‘new reality’, the fund is an idea that has long been defended by insurance companies. According to the minister, it “will be capitalised with property and equipment insurance and then with reinsurance.
“What it will do is charge a fee on insurance to cover these types of risks that are not yet covered, because part of it is already covered by insurance, and then reinsurance is taken out with large international insurers,” he explained – adding that it has yet to be decided whether the fund will be created through an increase in policies or whether insurers will come forward with an initial amount – leading to the concept of ‘compulsory insurance’, or at very least, contributions (to the fund) linked to policies.
Heads of the largest insurance companies operating in Portugal have already admitted they have “never had a phenomenon with such an impact” to deal with as Storm Kristin.
Generali Tranquilidade CEO, Pedro Carvalho, has told Expresso that “the compensation paid by the sector as a whole could reach €500 million” – albeit it is still too early to come to any kind of definitive figure.
That €500 million (compensating people/ companies who have insurance) will be in addition to the €2.5 billion raft of measures created by the government (compensating people/ companies etc. who don’t have insurance).
As for the direct payments of up to €10,000 promised to uninsured families and businesses affected by Storm Kristin, these are being accelerated, said the minister – and should be being paid by Monday “at the very latest”. And he showed some positivity about maintaining a budgetary surplus of 0.1% of GDP for the year – saying: “We will do everything we can — assuming there are no new storms or calamities, and that there is no international recession on the horizon this year that could bring the Portuguese economy to a halt — to maintain balanced public accounts.”
Source material: ECO citing Público
