The Tribune

By ANNELIA NIXON

TRIBUNE Business Reporter

anixon@tribunemedia.net

INSURANCE regulators yesterday said a shortage of qualified actuaries remains a key constraint on the industry’s growth as The Bahamas seeks to align its supervisory framework with evolving international standards.

Bionca Rolle, assistant manager of the Insurance Commission’s regulatory strategy and development office, said the shortage of qualified actuaries makes it harder for the regulator to ensure insurers are adequately measuring and capitalising against the risks they carry.

“Almost no one talks about” the actuarial shortage, Ms Rolle said, describing it as the constraint that has concerned her most. “Everything I have described - risk-sensitive capital, climate scenario analysis, catastrophe modelling, how books move in two directions at once - rests on a particular kind of person,” she added.

An actuary is responsible for using mathematical and statistical analysis to assess risks ranging from hurricanes and mortality to long-term insurance liabilities. Ms Rolle said the shortage matters because “a regulator cannot supervise what it cannot model”, particularly as The Bahamas seeks to develop capital requirements that reflect the country’s exposure to catastrophic events such as Category Five hurricanes.

The Commission is responding by building its own actuarial expertise while investing in Bahamian talent. Ms Rolle said two Bahamian actuaries who have been working in Canada have returned to The Bahamas and are now based at the Commission’s Freeport office.

One focuses on property and casualty insurance, covering areas including homes, businesses, vehicles, boats and hurricane risks, while the other focuses on life, health, annuities and pensions.

The Commission is also sponsoring Bahamian students to study actuarial science at Drake University in Iowa, which Ms Rolle described as a designated centre of actuarial excellence. The Commission’s first scholarship recipient is a Grand Bahamian who interns at its Freeport office during university breaks and is paid for the work, she said.

“We want more of them,” Ms Rolle said, adding that the scholarship programme is intended as long-term institutional infrastructure rather than a public relations initiative.

The push comes as the Commission works more closely with the International Association of Insurance Supervisors (IAIS), the global standard-setting body for insurance regulators, of which The Bahamas is a member.

The IAIS has more than 200 jurisdictions among its membership and has recently advanced international standards around risk-based capital, natural catastrophe protection gaps and risks arising from increasingly complex insurance and reinsurance structures.

Ms Rolle said those developments have direct implications for The Bahamas, where a single major storm can generate losses that far exceed the combined equity of the domestic general insurance industry.

The IAIS adopted the Insurance Capital Standard as a globally comparable, risk-based measure of capital adequacy for internationally active insurance groups, following years of development, consultation and field testing, she said. For The Bahamas, the principle is that insurers’ capital requirements should increasingly reflect the risks they actually carry rather than rely solely on fixed requirements established years earlier.

The Commission is now working to incorporate that approach into Bahamian legislation. Ms Rolle said it is leading the harmonisation of the Insurance Act 2005 and External Insurance Act 2009 into what she described as a more modern regulatory framework, including simplified licensing categories, clearer obligations, stronger group supervision and greater cross-border co-operation.

The proposed framework is also intended to introduce capital requirements that respond more closely to the risks carried by individual insurers. The focus on capital and actuarial capacity is rooted partly in the lessons of previous insurance failures and disasters.

Ms Rolle pointed to the collapse of CLICO Bahamas, for which the Supreme Court granted a winding-up order in February 2009. About 23,000 Bahamians held policies with the company, she said, while its failure involved approximately $73m advanced through a subsidiary into a Florida real estate development. The liquidation remains unfinished 17 years later, she added.

The Commission itself opened in July 2009, months after the CLICO incident. Ms Rolle said the experience reinforced the importance of understanding where insurers’ assets are located, how related-party transactions are structured and the financial strength of foreign groups backing Bahamian insurers.

Hurricane Dorian provided another test of the country’s insurance system. Bahamian insurers settled more than $2bn in claims following the 2019 storm, Ms Rolle said, attributing the industry’s ability to absorb the losses in part to required capital and reinsurance arrangements.

However, the storm also exposed a significant protection gap. Industry estimates at the time indicated that 40 to 50 percent of property owners in affected areas had no insurance coverage, while around 75 percent of insured property owners were under-insured. That gap remains a focus of the Commission’s regulatory strategy alongside climate risk and risk-sensitive capital.

Ms Rolle said the IAIS has also identified natural catastrophe protection gaps as a financial stability concern because uninsured losses can ultimately affect banks, governments and other parts of the economy. “The risk does not vanish; it migrates,” she said.

The Commission has also begun treating climate risk explicitly as a financial risk, Ms Rolle said, following a market survey and climate-related risk management guidance issued last year. The guidance places climate risk within insurers’ Board oversight, enterprise risk management, scenario analysis and reinsurance planning, while Commission examiners are checking whether insurers are actually applying those measures. 

The Commission’s expanded presence in the north is intended to strengthen that regulatory capacity closer to the communities most exposed to catastrophic risk. It opened its Freeport office at Pajaro House on West Mall Drive in May 2025, creating a northern base for Abaco, Grand Bahama and other Family Island policyholders.

Ms Rolle said the office gives residents a place to raise questions about policies, claims and licensed insurance professionals without having to rely solely on Nassau.

Looking ahead, affordability remains another major concern as catastrophe reinsurance costs have increased following major losses globally, including Hurricane Dorian. Ms Rolle said the regulator cannot control reinsurance prices in international markets but can ensure that the capital supporting Bahamian policies is genuine and that risks are being properly measured.

She also argued that stronger building standards and resilience could eventually be reflected more precisely in insurance pricing, potentially creating financial incentives for property owners to reduce their exposure.

For policyholders, Ms Rolle urged them to obtain updated valuations, review their policy schedules and exclusions, assess coverage for contents and equipment, understand business interruption triggers and indemnity periods, document their possessions and verify that agents, brokers and adjusters are licensed by the Commission.

The broader objective, she said, is to ensure the insurance sector has the technical capacity to withstand the next major shock. “Insurance works by spreading risks across people who will not suffer all at once. A pandemic breaks that,” Ms Rolle said.

For The Bahamas, she added, a major hurricane can create a similar concentration of risk, making actuarial expertise, climate modelling, capital adequacy and reinsurance increasingly central to the country’s financial resilience.