By Charlie Wood From Reinsurance News

A new report from A.M. Best points to the responsiveness of reinsurers as a driving factor behind Caribbean property and casualty (P/C) insurers’ ability to withstand the record-setting impact of 2017’s hurricane season, enabling them to quickly resolve and settle the high volume of claims.

Despite the magnitude of catastrophe losses, it was largely an earnings event for most rated Caribbean insurers, which remain well capitalised, with only rare instances where additional capital is needed to shore up a weakened balance sheet.

The report praised reinsurers’ effectiveness and underlined the necessity of such programs in bolstering insurers’ ability to remain well-capitalised in the aftermath of substantial catastrophe losses. With A.M. Best believing reinsurance partnerships in the Caribbean are essential for the region’s insurers ability to remain viable and focus on their life, health, small commercial, and automobile businesses.

Also highlighted was the significant disparity between economic and insured losses in comparison to North America, driven by a lack of insurance penetration.

In fact, this economic vulnerability exposed by 2017’s hurricane losses illuminated the Caribbean’s wider need for increased strengthening structurally and financially. Climate change only increases the unpredictability and severity of the damage inflicted by rising sea levels, flooding, erosion and warming sea temperatures, which could result in stronger storms in the future. This continued trend of low penetration could compound the economic costs of future storms.

A.M. Best-rated P/C insurers saw consolidated net income decline 99.7% in 2017 year over year, due primarily to losses associated with hurricanes Irma and Maria.

The combined ratio deteriorated by 11.8 points to 106.6%. Consolidated gross premiums increased 1.8%, while net premiums decreased by approximately 1%.

The top line revenues of the region’s life and health companies showed some momentum in 2017, as revenues rose by nearly 10% and consolidated earnings grew by 4%. Although not subject to the volatility of their P/C counterparts, life and health companies are more impacted by economic conditions such as GDP, monetary policy and unemployment.

Thanks to the reinsurance industry’s strong capital position, Caribbean insurers were able to renew their contracts with price increases that were consistent with loss experience. Though some loss-affected areas have seen rate increases of as much as 50% – with non-affected areas increasing by around 10% – Reinsurance capacity is still available.

For more on this story go to; https://www.reinsurancene.ws/caribbean-insurers-well-capitalised-despite-2017-hurricane-losses-says-a-m-best/