The Tribune

• Move comes as Colina re-enters underwriting

• Both parties tight-lipped on developments

• Concerns raised over implications for Act

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamas First has issued Colina General Insurance Company with 90 days’ notice that it plans to terminate their agency relationship because of the latter’s parent re-entering the underwriting business.

Both insurance businesses were tight-lipped when contacted on the issue yesterday, but well-placed sources - speaking on condition of anonymity - confirmed that Bahamas First had been prompted to act at least in part because Colina General’s parent group has now become a direct competitor.

Patrick Ward, Bahamas First’s president and chief executive, told Tribune Business that the two parties’ “relationship is effectively going to change” but declined to go into specifics other than to say the move did not reflect anything untoward by either party.

“It’s not something I can officially comment on,” he replied, when asked if Bahamas First had given 90 days’ notice of its intent to terminate a relationship that saw Colina General write several million dollars worth of business for it annually. “We don’t comment in public about contractual issues between Bahamas First and other entities.

“While the relationship is effectively going to change, I cannot comment one way or another about the rationale behind it except to say there was nothing untoward about this development on either side.” It is understood that the official date of termination is at the end of October 2021.

However, Tribune Business was told that a key factor behind Bahamas First’s move is that Colina and its parent, A.F. Holdings, have re-entered the property and casualty underwriting business that they exited more than a decade ago. Sources said Indigo Insurance (Bahamas), which was licensed on May 5, 2021, by the Insurance Commission, is the name of their new carrier.

Colina was even more tight-lipped than Bahamas First when approached by this newspaper for comment, not even referring to the agency termination of Indigo Insurance (Bahamas). A spokesperson said via e-mail: “Colina General Insurance Agents & Brokers (Colina General) is a significant broker in the property and casual market.

“The company has grown considerably over the years and has expanded its partnerships with several reputable AM Best-rated general insurers...... As leading brokers within the industry, Colina General continues to prioritise the insurance needs and service expectations of its clients as a core commitment.”

However, multiple sources said the manner of Colina’s re-entry into property and casualty underwriting had caused some disquiet within certain segments of the Bahamian insurance market. One confirmed: “Colina is in the general insurance business. The have an insurance company that is licensed by the Insurance Commission.

“They already had the agency, and now they have formed an insurance company that was licensed six months ago and started to trade three months ago. Colina, the agency, did business with three other insurance companies in The Bahamas. One of those companies has issued a termination of agency notice, while at least one other is contemplating doing the same thing.

“The reason is that they’re not going to allow Colina to cherry pick business from their insurance companies and give them the scraps.” The source said they were not opposed to the extra competition that Colina will provide, but suggested its market entry could have been handled better by informing the likes of Bahamas First in advance and pledging to keep the existing book of business with those carriers.

Tribune Business understands that Security & General and Guardian General are the two other underwriters that Colina General writes business for. “It wouldn’t surprise me if all those entities are not considering the same kind of response as Bahamas First,” another contact added. “They’ll have to make their minds up.”

This newspaper was told that Colina’s property and casualty underwriting ambitions have now come “full circle”. It entered the market in 2002-2003, but was forced to exit some years later after its strategy of undercutting all competitors on premium pricing, and underpricing risk, was exposed by the explosion at the late attorney, Colin Callender’s, Lyford Cay home and several other high-profile, costly claims.

It ultimately ended up exiting by selling the book of business it possessed then to, ironically, Bahamas First. “Hopefully they’ve learned from their mistakes,” one source said on condition of anonymity. Another added: “They closed with big losses. We knew at some point they would do this and come back into general insurance; it was only a matter of time before they said: ‘We’re going to take that premium back’.

“The question is what is fundamentally different from when they were in it before? Is it going to be riskier, undercutting, taking more risk and hoping to make up? We’re not surprised.”

Meanwhile, Tribune Business was also informed that concerns are being raised in the insurance industry as to whether Colina’s move violates section 22 of the Insurance Act, which stipulates that “no company may be registered to carry on both long-term (life and health) and general insurance business at the same time”.

While Colina is likely to argue that Indigo is a separate company from its life and health business, this newspaper understands queries and concerns are likely to be raised with the Insurance Commission. “It’s always been the regulator’s opinion that the two should be kept very far apart,” one source added. “If Colina is allowed to do this, not only do they have a general insurance agency but an insurance company and life and health insurer.”