Property insurance rate hikes likely in 2021
Property owners in Antigua and Barbuda and the rest of the Caribbean were spared property insurance rate increases this year as a result of the disruptions linked to the COVID-19 pandemic that forced large reinsurers to hold off implementing rate increases.
PointeXpress’ Business and Economy correspondent canvassed the views of several domestic insurance professionals after news from Jamaica and Barbados revealed that rate increases for property insurance are on the table in 2021.
A senior executive who preferred not to be named, explained that reinsurers treat the Caribbean as a single pool, therefore whenever there are significant payouts over a few years across countries, rates will go up across the region.
Specific examples of hurricanes and flooding in Dominica, the impact of several major hurricanes in the Bahamas, significant claims for flooding in Trinidad and Tobago, St. Lucia and Jamaica in recent years have all resulted in significant claims which in turn have caused the coming increased premiums.
The rate increases also represent the cost to the region of securing the continued presence of underwriters who are critical to business and attracting foreign direct investment.
There was no firm projection of the size of the increase. Among the factors for consideration would be the scope of individual companies to offset the increased cost of the underwriting by reinsurers.
Another insurance executive who promised a more detailed discussion after his organisation’s strategic planning sessions, posited that domestic insurance companies are likely to be the biggest losers when rates increase.
Policy cancellations were a major factor in 2020 which was directly linked to the economic fallout of COVID-19. It is also unlikely that there will be sufficient turnaround to stem this fallout in 2021 which is likely to worsen with pending increase rates.
It is also likely that regional insurance companies that are able to spread their risk and offer differential rates will fare better.
The anticipated claims associated with the recent flooding in Antigua and Barbuda will also negatively impact the 2021 rate increases.