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Local News>We're
safe, say insurance companies - 'Dean' claims won't unbalance industry |  |
Jamaica's insurance providers are reporting that they have weathered Hurri-cane Dean, saying the level of claims to date has posed no challenge to their liquidity.
Sector players were not as willing to make a call on how premiums would be impacted in the year ahead, but suggested any adjustments would likely be minimal.
"The industry is safe, the impact of 'Dean' was nothing compared to 'Ivan' and will not throw the industry out of balance," said Annette Robotham, general manager of the Insurance Associa-tion of Jamaica.
Claims for damage from Hurricane Ivan, which hit Jamaica and other Caribbean islands in 2004, bankrupted Dyoll Insurance Company, prompting a takeover and lockdown of the company by insurance regulator, the Financial Services Commission.
Cautious
The FSC, while noting that there was no parallel to Dyoll now, was a little more cautious than the IAJ in its pronouncement on 'Dean's impact, saying Wednesday that not all the reports were in.
"We have gotten some data on the industry, but it is too early to make an official conclusion," said Leon Anderson, senior director of insurance at the FSC.
Sector companies, he said, have been given until the end of this month to provide a total estimate of claims.
However, according to Anderson, preliminary information coming out of meetings with association members is that Dean, while its gale strength had matched Ivan's, was not a big enough event to cause a dent in the industry.
In the meantime individual companies, who have given their clients up to the third week in September to submit claims, have been tallying the liabilities and paying out to policyholders.
"Based on the estimates and payments to date, we are now estimating that Hurricane Dean will cost us around $100 million," said Moreen Marks vice-president of risk management at Insurance Company of the West Indies.
Property policies, said Marks, have a 30-day notification period, so ICWI would have had a final count by Wednesday.
Up to five days before the end of the notification period, ICWI had tallied 123 claims, of which 63 had estimates of damage valued at $19.4 million, while the other 60 were notifications of claim.
According to Marks, ICWI is in the process of receiving adjusters reports, the basis on which claims are paid.
Claims
American Home Insurance Company is reporting 166 claims valued at $69.8 million for personal property and 36 claims valued at $16 million for commercial property - a total of just under $86 million.
"We do not expect figures to change upwards," said general manager Earl Codling.
"We expect that the numbers for personal property will show a downward trend as a significant number will not be paid or the final amount will be reduced due to the 2.0 per cent deductible for catastrophe losses."
NEM Insurance, meantime, is facing a much bigger payout. Up to September 14, NEM had received 459 claims, said assistant general manager in charge of claims, Alicia Browne.
"The preliminary reserves set against these claims total $275 million," Browne told the Financial Gleaner.
The company, however, says its clients have until September 21 to give notice of pending claims, after which a more precise reading of the payouts would be done.
Not all underwriters were ready to comment, but assuming an average of $150 million payment - the mean of the three companies reporting preliminary claims - from each of the eleven general insurance companies, Dean's bill would likely run to just about $1.7 billion for the sector.
Compared to Ivan, Dyoll's liabilities alone on outstanding claims at takeover was $886 million, rising to $2.2 billion when the Caymanian debt was taken into consideration.
As for anticipated increases in insurance premiums, which is usually a given after big payouts, the companies said it was too early to make that call.
"It is difficult to determine whether or not premiums will be increased next year," said Codling.
"If we are affected by any further catastrophes during this period then it is almost a certainty that rates will be increased. If no further hit, we could see rates remaining unchanged."
Marks said the effect would likely be minimal, but only if the storm season produced no more big catastrophes.
Important factor
"Our experience has been that the most important factor influencing the price of property insurance is the availability and cost of reinsurance. This in turn is influenced by catastrophes, not just in our region, but worldwide," she said.
In 2005, the average increase in premium by reinsurers for companies in the Caribbean was said to be 16.5 per cent. Local insurance rates shot up as a result.
"Once international reinsurers have to pay out large sums for losses," said Codling, "it is bound to affect our local market rates since they are same ones that insure us as insurers."
The rate of increase would be based on added charges by reinsurers on local insurance companies for catastrophe loss protection.
Browne said 'reinsurance treaties' would only be negotiated during November and December 2008.
Damage from Hurricane Dean to the country overall was estimated at $20 billion, a bill that included damage to infrastructure and agriculture.
No estimate is available on how much of that loss was insured.
Jamaica has disaster insurance, but its provider, Caribbean Catastrophe Risk Insurance Facility, has said the damage from Dean was not sufficient to trigger payment on the island's US$50 million storm policy.
sabrina.gordon@gleanerjm.com