The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

INSURERS believe Hurricane Matthew’s total insured losses will “stick around” the initial $400 million estimate, with one carrier suggesting it had received just 60 per cent of expected claims by last week’s end.

Anton Saunders, RoyalStar Assurance’s managing director, told Tribune Business that the Bahamian property and casualty industry’s losses, as a percentage of the sums insured, were likely to be greater in Grand Bahama than New Providence.

“What we’re seeing now is that we believe Freeport is going to be worse than New Providence, percentage of aggregate wise, as it looks like they took the brunt of a Category Four storm,” he said.

“In New Providence, the south-eastern and south-western coastal corridors are where the majority of the losses are coming from. But we believe the percentage of loss for Freeport, based on the aggregate, is going to be higher than New Providence.”

Mr Saunders said RoyalStar, in common with other underwriters, and their intermediaries and loss adjusters, was assessing damage to both residential and commercial properties.

“So far, we have recorded about 700 claims between Nassau and Freeport,” he told Tribune Business as of late Friday afternoon. “We expect that number to be at least 1,000-1,200, so there’s about 40 per cent more to come.

“People are coming in, being served and being assigned to a loss adjuster in the field. We’d like them [the adjusters] to expedite it, but you can only go with the resources you have in the field.

“People are having challenges with property access, light and communication. We’ll ensure by Monday/Tuesday that every claim we have, an adjuster will have contacted that person.”

Mr Saunders acknowledged that global insurance industry estimates of the Bahamas’ Matthew-related losses “are all over the place”, ranging from $600 million to $2 billion, and even $5 billion.

He added, though, that the Bahamian property and casualty sector was currently comfortable with its original “in excess of $400 million estimate”.

“I know the industry came up with in excess of $400 million, and based on the numbers, we believe the number is going to stick around there,” Mr Saunders told Tribune Business.

Tom Duff, Insurance Company of the Bahamas (ICB) general manager, said he was taking the company’s $28 million total losses/payouts from Hurricane Frances in 2004 as “the starting point” for working out Matthew’s impact.

Estimating that this figure had increased to $33 million, taking into account today’s valuations and sums insured, Mr Duff suggested it represented the ‘floor’ for calculating Matthew-related losses.

“The only thing that most people in the industry are agreeing with is that we expect the final outcome to be more expensive than any other hurricane we’ve faced in the past 20 years,” Mr Duff told Tribune Business.

“For ICB, the largest loss we’ve faced was Hurricane Frances in 2004. A simple calculation from what we’re hearing and seeing is that claims are going to be more than that. It’s obviously going to be very, very expensive, and clearly the extent of the damage is greater in Grand Bahama.”

ICB is the property and casualty insurer through which J. S. Johnson, the BISX-listed broker and agent, places much of its general insurance business.

Mr Duff said both companies expected to continue receiving Matthew-related claims for the next two-three weeks, and added: “It’s a tricky one. Our final loss will take a few weeks to develop, due to the complexity of the claims and sheer number of properties that have been damaged.

“Loss adjusters are already in the field as we speak, and the next few weeks will be really busy for those working on the claims side of things.”

Despite the multi-million dollar value of expected claims and industry payouts, which will negatively impact the 2016 financial performance of all property and casualty underwriters, Mr Duff said Matthew had provided the sector with “a big opportunity” to show how well it could perform.

“We have to accept the fact that were it not for hurricanes, we would not have a business; certainly not to the scale it is today,” Mr Duff said of the Bahamian insurance industry.

“This is why we exist, and it is a chance for the industry to excel and demonstrate to people the value of having an insurance policy. It’s a big hit for the insurance industry, but also a big opportunity for the industry to sell ourselves. I’m sure we will.”