HOME and motor insurance premiums could face fresh pressure if proposed fee increases by the Financial Services Commission (FSC) are approved, with general insurers potentially facing about $500 million in additional regulatory costs.

The proposed increase is not a direct charge on policyholders. It would be paid by general insurance companies to the Financial Services Commission (FSC). However, insurers may eventually try to recover some of the added cost through higher premiums. That is why the proposed FSC increase could eventually matter to policyholders.

The FSC is seeking parliamentary approval to amend the Insurance Act for fee changes across the industries it regulates as it tries to close a persistent operating deficit. The regulator reported a $502.4-million net deficit for the year ended March 2025 and expects a $407.3-million deficit for the year ending March 2026.

To keep operating, the FSC has had to use its reserves, including selling investments and cashing in short-term placements.

Aisha Wright, divisional director in the Financial Regulations Division at the Ministry of Finance and the Public Service, told Parliament’s Regulations Committee in April that it costs an estimated $749 million to supervise the insurance industry, but the FSC collects only $487.2 million in fees, leaving a shortfall of $262.5 million.

Under the proposed changes, general insurance companies would pay 0.45 per cent of audited total assets when they renew their licence.

That would replace the current fee structure, under which each general insurer pays a fixed fee of $4.7 million plus 0.20 per cent of audited total assets.

General insurance covers policies such as motor, property, liability and other non-life insurance.

According to the FSC’s insurance sector review, there are 11 general insurance companies registered in Jamaica.

Based on the December 2024 figure of about $102 billion in total assets, those companies paid about $255 million in fees to the FSC under the current structure.

Under the proposed structure, they would pay about $458 million. That would be an increase of about $203 million based on total assets prior to the hurricane.

The impact becomes much larger when the industry’s unaudited 2025 asset base is used.

After Hurricane Melissa, general insurers’ balance sheets rose sharply, partly because they booked amounts expected from reinsurers. That does not mean the companies suddenly became twice as strong. It reflects, in part, the accounting impact of major claims and expected recoveries from reinsurers.

The FSC review shows the general insurance industry’s unaudited asset base at $220.7 billion at December 2025.

Based on that figure, the current fee structure would produce about $493 million in fees. Under the proposed structure, the amount would rise to about $993 million.

That is an increase of about $500 million, or just over 100 per cent. On average, each general insurer would pay about $45 million more.

The timing is important because the industry is already under pressure from hurricane-related claims.

According to the FSC review, general insurers made $2.6 billion in net profit in 2024. In 2025, the industry had reported $2.3 billion in nine-month net profit before Hurricane Melissa, but net profit was reduced to about $30 million after the hurricane.

That means the estimated $500-million increase in FSC fees would be equal to about one-fifth of the industry’s 2024 net profit.

General insurers make money in two main ways. First, they collect premiums from policyholders and pay claims when losses occur. If claims and expenses are lower than the premiums collected, the insurer makes a profit from its insurance business. Second, insurers invest some of the premiums they collect and earn investment income.

Motor insurance is one of the most visible parts of the industry because at least third-party motor insurance is required by law. But it can also be a difficult line for insurers because claims and expenses are often high.

Other areas, such as property, liability and commercial insurance, along with investment income, can help offset pressure from motor insurance.

In a normal year, insurers may be able to absorb higher costs through investment income, better pricing or stronger performance in other lines of business. But in a year with a major hurricane, that becomes harder.

Large disasters can sharply increase claims. They can also affect the payments insurers receive from reinsurers, which are the large global companies that take on part of the risk from local insurers.

If the fee increase is approved, insurers would have to find a way to absorb the higher regulatory cost. They could try to do that through higher investment income, cost control or better performance across different lines of business. But part of the cost could also show up in the premiums charged to customers.

That does not mean premiums would automatically rise because of the FSC fee proposal. Insurance prices are also affected by claims, reinsurance costs, competition, inflation, and the risk profile of policyholders. This is on top of general insurers paying the annual asset tax of 0.25 per cent on their taxable asset base.

However, the proposed increase would add another cost at a time when consumers and businesses are already dealing with higher transport, fuel and other expenses.

The Insurance Association of Jamaica has already raised concerns about the proposed hike, but it is not yet clear whether the proposal will be adjusted before final parliamentary approval.

The issue is especially sensitive in western Jamaica, where Hurricane Melissa has slowed economic activity and could affect the ability of some policyholders to renew coverage. Some customers have also faced lower-than-expected payouts because they were underinsured, meaning their policies did not fully match the value of the property or assets they wanted covered.

The FSC has also proposed changes to the annual renewal fees paid by life insurance companies, which make up the largest part of Jamaica’s insurance industry.

Life insurance companies currently pay annual renewal fees on a three-tier basis ranging from 0.04 per cent to 0.14 per cent of total assets. The FSC is proposing to replace that with a flat fee of 0.07 per cent of total assets.

For the six life insurance companies, that would move annual renewal fees from about $210 million to about $356 million, an increase of roughly 70 per cent

The life insurance industry had $508.8 billion in total assets in 2025. It made $18 billion in net profit for 2024 and reported unaudited profit of $21.5 billion in 2025.

Insurance intermediaries such as brokers, agents, loss adjusters, investigators and consultants who help connect customers, insurers and claims services would also face higher fees. Their fees would move by at least $600 to $2,100 per class of insurance business offered to the public.

A table showing the impact of the proposed fee change on general insurers.