The Tribune

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

Bahamian insurers are willing to work with the Government in creating a pool mechanism that would make catastrophe coverage more affordable for homeowners and businesses, its association chief said yesterday.

Julian Rolle, the Bahamas Insurance Association’s (BIA) president, agreed with concerns voiced by Gowon Bowe, Fidelity Bank (Bahamas) chief executive, that reduced capacity and increased premium costs are making it increasingly difficult for new mortgage borrowers to obtain insurance, which is something they require to complete the loan and conclude their property purchases.

“Unfortunately, Mr Bowe is correct in his statement that there is a significant reduction in capacity in in catastrophic insurance, which basically means that homeowners - while they can get coverage for fire and other types of perils - there is a shortage in coverage available for hurricane damage,” Mr Rolle explained.

Bahamian property and casualty underwriters must acquire huge amounts of reinsurance annually because their relatively thin capital bases mean they cannot cover the multi-billion dollar assets at risk in this nation, thus making them dependent on global support.

However, the huge losses suffered by the global reinsurance market in recent years from payouts caused by Caribbean hurricanes and other worldwide natural disasters has resulted in both investors and companies withdrawing from this market. This has had the twin effects of both reducing the available supply of catastrophe coverage and increasing the cost for those who require it.

“The BIA and the insurers do try to look for additional capacity. However it is not available in the market at this time,” Mr Rolle said. His comments came after Mr Bowe suggested that the Government work with the insurance companies to create a captive insurer, essentially a means of self-insurance, that would pool the risk to both reduce costs to consumers and increase coverage availability.

“It would be helpful if there could be an insurance pool, but that requires significant capital,” Mr Rolle said. “An insurance pool where the Government has to facilitate and help - he’s not saying that they should start a pool per se. He said that they should be working with the industry to find a solution for the problem. So my response is the BIA would be happy to have the Government facilitate beginning a pool, and looks forward to working with the Government to do so.”