Caribbean insured losses estimated at US$50b after big storms - Most properties underinsured, says ATTIC
The Association of Trinidad and Tobago Insurance Companies, ATTIC, says insured losses within the Caribbean this hurricane season is estimated at around US$50 billion, so far, but notes that initial regional feedback suggest a high number of properties and valuable assets in areas devastated by storms were underinsured.
Several Caribbean countries, notably Dominica, Antigua and Barbuda, the British Virgin Islands and Anguilla, were severely damaged when Hurricanes Irma and Maria made their way through the Lesser Antilles last month.
In a statement, ATTIC said this hurricane season has been the third most active on record, with more than eight weeks still to go before the official end of the season on November 30.
It said that projected insured losses within the Caribbean for the season so far are estimated on the lower range to be in excess of US$50 billion. Earlier estimates by catastrophe modellers have placed the losses for Maria alone within a band of US$40 billion to US$85 billion.
"Losses of that magnitude are expected to wipe out more than 15 to 20 years of profits of reinsurers and insurers, who do business within affected islands. There is also an expectation that for some regional insurers, the losses will result in a capital event," the group said.
ATTIC said that reinsurers who do business within the Caribbean have been issuing advisories to the regional insurance industry to plan for much higher rates at renewal of their reinsurance contracts.
It said one major reinsurance provider within the market has advised that insurance premiums across the region will increase anywhere from 20 per cent to more than 200 per cent.
"It was further noted that increases will not only be seen within islands affected by a windstorm event this season, but all islands. The anticipated increase in each island, also dependent on how underpriced the particular island's premium rates are at this point in time," ATTIC said.
It would also halt the southward drift for premiums on a regional basis.
The group said that within the region, insurance rates on average have declined annually for more than 10 years and are currently at historical lows, due to factors such as excess investment capital and reinsurance capacity and relatively low loss experiences.
"This trend is certainly anticipated to change over the coming months, given recent events," said ATTIC.
"The regional market could also expect some reinsurers to withdraw from the region or significantly reduce their capacity. This already started last year, but with the most recent losses, we can expect a bump in the number of withdrawals as well as a reduction in capacity for the region."