Hurricane damage in Codrington, Antigua and Barbuda, in September. Barbuda was devastated by Hurricane Irma. (Photo: AFP)
Jamaicans with property insurance should anticipate increases in premium rates as international reinsurers, still reeling from a flurry of claims received due to hurricanes Harvey, Irma and Maria, will be raising coverage costs for their counterparts in the region.
According to Insurance Association of Jamaica (IAJ) Vice-President Peter Levy, the price increase by international reinsurers is an attempt to recover the massive losses they suffered during the recently concluded hurricane season. The impact of this on local general insurers whose property portfolios are reinsured by international insurance providers will mean that increased costs will be passed on to customers.
“Jamaican customers can expect their premium rates to go up by 30 per cent to 35 per cent,” Levy is quoted in a release from IAJ. “The increase will be even higher in territories where there were direct hits [from hurricanes].”
The IAJ vice-president explained that despite Jamaica not feeling the direct impact of hurricanes this year, like territories Puerto Rico, Dominica and St Maarten, the country still faces similar risks.
“After several years of significant reductions in insurance prices, higher rates are now being demanded for coverage when local insurers negotiate with overseas reinsurers,” Levy, also the managing director of British Caribbean Insurance Company (BCIC), stated. “With most of the property insurance risks in the hands if these reinsurers, the local industry has had to raise its rates.”
Lloyd’s in the United Kingdom recently announced that it has paid US$1.7 billion in claims to cover damages from hurricanes Harvey, Irma and Maria. Just last month, German reinsurer Munich Re reported in Insurance Business Magazine that it has so far received US$3.72 billion in claims.
The principles guiding reinsurance are the same as insurance— pooling all the funds received from premiums to pay the claims from those suffering damage, Levy explained. The financial burden is therefore shared by all the reinsurers’ policyholders in order for individual customers, companies and countries to recover claims.
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