No home insurance changes before August, says NHT
The National Housing Trust (NHT) says that while it is unable to say what increases may result from the current move by reinsurers to raise rates, current property insurance rates will hold until August 2018.
The NHT's reassurance follows an advisory from the Insurance Association of Jamaica (IAJ) that pressure from international reinsurers is forcing a rise in Jamaican property insurance rates within a range of 30-35 per cent.
"Reinsurers are raising their prices to local insurance companies in an attempt to recover from the massive losses they suffered during the recently concluded hurricane season," said IAJ vice-president Peter Levy in the statement.
"General insurers in Jamaica, whose property portfolios are protected by reinsurance, have had to pass on their increased costs to their clients," he said.
Asked how its mortgage borrowers would fare, the NHT, in a response channelled through its communications department, said that current rates would hold until mid-summer.
"The National Housing Trust is unable to speculate at this moment as to the impact of any adjustment in insurance premiums from reinsurers on rates to our mortgagors. It must be noted, however, that our mortgagors will continue to pay their existing property insurance premiums until August 2018. Any decrease or increase in insurance premiums will be communicated to our mortgagors by this time," the state agency said.
In general, the NHT facilitates life and peril insurance coverage for mortgagors. The insurance premiums are rolled into monthly mortgage loan payments.
The NHT, as at August 2017, oversaw 106,000 mortgage loans and a portfolio valued at more than $170 billion. But factoring for the Joint Finance Mortgage Programme through which contributors can obtain financing from the NHT and its partners, the trust said that the portfolio tops $200 billion.
Private mortgage provider Victoria Mutual Building Society said that it was unable to comment on the rate impact because it was yet to be advised by its insurance company, while the JN Group is signalling that mortgage payments are to likely rise.
"The percentage increase in monthly payment is dependent on the sum insured and the insurer's premium rate. Note that an increase in peril insurance rates will result in an adjustment in mortgage payments, where applicable," JN said via its communications department.
Peril insurance covers fire, earthquake, hurricane, storm, flooding, and wind damage. The NHT said that the peril insurance for strata units or apartments covers the loan balance against loss or damage to the unit.
Levy of the IAJ outlined that while Jamaica was not directly affected by any of the 2017 hurricanes, "the country faces similar risks to Puerto Rico, Dominica, and St Maarten, which suffered devastating blows." He said that reinsurers pool the premiums from all of their customers to be able to pay for the claims of those suffering damage.
"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," he said.
Lloyd's, the leading international reinsurance market, recently reported that it has so far paid claims worth US$1.7 billion to cover damage from Hurricanes Harvey, Irma, and Maria. And German reinsurer Munich Re announced in November that it faced US$3.72 billion in claims, mostly from Hurricanes Harvey, Irma, and Maria, the IAJ said.