Insurance
Hughes continues; “With so many choices available to the consumer,
competition was intense, which resulted in a decline in property rates
from 2006. What really drove the slide as well was the impact of the
international financial crisis between 2008/2009, in addition to this
was the fact that there was a sustained quiet period without any major
catastrophic losses. The industry prospered, and Investors lured by these
favourable returns, were drawn to the reinsurance industry, resulting in
surplus capacity. This sent the market into a soft segment of the cycle
and pricing plunged.”
Hughes further explains: “Catastrophes in the Northern Caribbean
and the United States can affect insurance pricing for Grenadian
consumers. Hurricane Andrew which hit Southern Florida in 1990 and
the 911 terrorist event in 2011, severely impacted pricing levels in the
Caribbean.
“
If you’re unsure if your business or
personal property is adequately
covered, seek an appointment with one
of our underwriters, or an insurance
professional, for advice.
“
“The hurricane losses from “Harvey”, “Irma” and “Maria” in 2017,
represented a combined loss to the industry, estimated to be in the
region of US$115 Billion. Affected were :- Anguilla, Barbuda, Dominica,
Puerto Rico, St. Thomas, Tortola and St. Marteen. The southern
Caribbean was unaffected by these storms but pricing and terms in the
territories were affected.
When reinsurers or insurers are faced with that level of loss they
immediately seek to go into recovery mode. Prices are generally increased
and terms and conditions of reinsurance treaties stiffened. Large losses,
like the ones experienced during the 2017 hurricane season, also tend
to cause underwriters to re-think their appetite for risk in catastrophe
exposed areas like the Caribbean and if they withdraw, en masse from
the region, capacity will be adversely affected. Some may cut their losses,
pack their bags and leave, while others who elect to continue trading in
the region will adjust their terms and conditions.
Following Hurricane Ivan, there was evidence of an increased interest in
purchasing insurance and increasing existing sums insured on property
insurance. The latter, was driven by many persons having their claims
subject to average, because of under insurance. For example; if you
have a property with a replacement cost (RC) of EC$1M and the Sum
Insured (SI) is insured for EC$500,000, in the event of a loss, the claim
adjustment would be subject to average, as the insured would be deemed
a co-insurer of fifty percent (50%) of the property. The situation could
be exacerbated should the loss be as a result of a catastrophe, where
the deductible is two percent (2%) of the sum insured.” The following
illustrates the formula for the calculation of average.
PHOTOS BY TONY MCQUILKIN
50