Most insured property owners in Jamaica and the rest of the Caribbean dodged an insurance rate increase in 2020, thanks to the COVID-19 pandemic, which sparked lockdowns and other business interruptions that forced large reinsurers to hold off implementing higher charges in the Caribbean region.
But Sharon Donaldson, managing director of General Accident Insurance Company and a vice-president of the Insurance Association of Jamaica, IAJ, says the sector is bracing for the higher rates that are definitely coming in 2021.
“Property rates are definitely going up next year,” she told the Financial Gleaner in an interview.
She explains that the major global reinsurers consider the Caribbean as an insurance pool for the purposes of premiums and claims, and as such when any one country is continuously affected by hurricanes or other catastrophes leading to repeated large insurance payouts, rates will go up throughout the entire region.
“When Swiss Re, Munich Re or Lloyds of London gives insurance support for any one insurance company in Jamaica, they provide insurance support for the entire region. The principle of insurance is that the misfortune of the few will be paid from a fund,” said Donaldson.
“They see the Caribbean region as a fund. Whenever one member in the region has a catastrophe, the rest of us have to pay for it. When Bahamas has had two catastrophes back to back, if they look at premiums from The Bahamas alone, they will never be able to fund The Bahamas again,” she said, referencing the repeated battering the country has received from major hurricanes over the past several years
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