The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian insurer currently believes its Hurricane Sandy-related claims will be 50 per cent of what it incurred from Irene in 2011, telling Tribune Business it was eyeing $3 million as its “ultimate estimate”.

Tom Duff, general manager of Insurance Company of the Bahamas (ICB), which last year received $6.7 million in gross claims from Irene, said the first week post-Sandy was “not looking as bad as 2011”.

ICB, through which BISX-listed J. S. Johnson places much of its property and casualty business, had received 50 claims during that first week. But fellow Bahamian general insurance underwriter, Summit Insurance Company, had received “well over 100 claims” over the same period, with its president, Timothy Ingraham, telling Tribune Business that gross claims were projected to be similar to the $6.5 million incurred from Irene.

“We’ve received a number of claims in now,” ICB’s Mr Duff said. “It’s certainly not looking at this stage as bad as it was with Irene. I don’t want to be too optimistic, because some of these claims from the Family Islands take a while to come in.

“But, from what we’re seeing now, comparing the first week of claims activity with Irene, the activity does seem to be less. That’s leading us to conclude the losses will be less than Irene; somewhere in the ball park of 50 per cent of Irene at this early stage. That’s subject to review.”

As of end-Thursday last week, Mr Duff said ICB had received 30 property-related claims, plus 10 motor and 10 marine claims, stemming from Sandy.

While ICB would be “more optimistic” on the claims numbers by the end of this week, Mr Duff told Tribune Business: “We were up over $6 million last year, and if we said $3 million at this stage, hopefully that’ll be the top end of our scale.

“We have checked with most of our big risks, and we dont seem to have picked up any sizeable losses with our mega risks. That obviously helps give us a little more confidence..... If we focus on $3 million gross as the ultimate estimate, wed hope to be inside that at the present time.”

Mr Duff said the Bahamian insurance industry was receiving flood-related claims “for the most part”, adding that Sandy`s wind damage was likely to be covered by policy deductibles.

Summit`s Mr Ingraham said the carrier, through which Insurance Management places most of its business, was, like ICB, stiill “trying to get a firm grip” on where the claims numbers would end up. He estimated it would mirror Irene, where 400 claims worth a gross $6.5 million were received by the underwriter.

“We see it as a similar event to Irene last year. I think we`re fairly close to what we thought wed get initially,” Mr Ingraham told Tribune Business. “From last Saturday our agents offices in Freeport opened, and they started receiving claims straight away even when the wind was blowing.”

Summit had already received “well over 100” claims, he said, adding: “Most of them are inundation claims. Water coming in from the sea has been the primary cause of losses and claims so far.”

Most of Summit`s claims had originated from Grand Bahama and Abaco, along with several in New Providence.

Meanwhile, both Mr Duff and Mr Ingraham said the devastation wrought by Sandy in the US meant reinsurers were unlikely to give discounts to Bahamian underwriters when 2013 renewals came up. As a result, property and casualty premium prices in this nation were set to remain unchanged.

“We`re up to the level now in New York where it may be significant enough for reinsurers for them to pull back on any discounts they were willing to offer to Caribbean companies on their catastrophe risk,” Mr Duff said.

“I dont want to be pessimistic about it, but losses are getting to the level where reinsurers may use it as an excuse not to provide those discounts. Well have to wait and see.”

For his part, Mr Ingraham agreed that Sandy`s impact on reinsurance costs, and the potential for further increases in Bahamian insurance premiums, was “a significant concern”.

“Last year was one of the worst on record for the reinsurance market with all the losses that occurred, and this year to the point where Sandy occurred was seen as a good recovery year to help reinsurers and rebuild their balance sheets,” Mr Ingraham said.

“It depends on how much of Sandy gets into the international market. It is still very early to tell that at this point. I certainly wouldn`t see any reduction coming from the reinsurance market, simply because they will not know what their losses will be by the time we sign on the dotted line for the new agreements.

“I dont see any of them giving discounts, so I dont see any reduction coming from it.”