Business

Ja property insurance rates hit by Caribbean hurricanes

BY JOSIMAR SCOTT
Observer writer

Friday, December 22, 2017

Print this page Email A Friend!


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.

He explained further that international reinsurers usually increase rates after major disasters, in an effort to recover losses. As such, without their services local and regional insurers would be “financially overwhelmed” should there be some catastrophic occurrence.

The National Hurricane Center in Florida, USA, has ranked the 2017 Atlantic hurricane season as seventh most active on record. Starting June 1 and ending November 30, there were 17 named storms and 10 hurricanes — six of which were considered major ones — this year.

“Up to this year, insurance rates have been at their lowest levels in recent memory. Unfortunately, after the most active hurricane season in more than a decade, that has all changed. Reinsurers expect Jamaican rates to return to the level that they were in the mid-2000s,” Levy stated.

ADVERTISEMENT




POST A COMMENT

HOUSE RULES

1. We welcome reader comments on the top stories of the day. Some comments may be republished on the website or in the newspaper � email addresses will not be published.

2. Please understand that comments are moderated and it is not always possible to publish all that have been submitted. We will, however, try to publish comments that are representative of all received.

3. We ask that comments are civil and free of libellous or hateful material. Also please stick to the topic under discussion.

4. Please do not write in block capitals since this makes your comment hard to read.

5. Please don't use the comments to advertise. However, our advertising department can be more than accommodating if emailed: advertising@jamaicaobserver.com.

6. If readers wish to report offensive comments, suggest a correction or share a story then please email: community@jamaicaobserver.com.

7. Lastly, read our Terms and Conditions and Privacy Policy



comments powered by Disqus
ADVERTISEMENT

Poll

ADVERTISEMENT
ADVERTISEMENT

Today's Cartoon

Click image to view full size editorial cartoon
ADVERTISEMENT