By NEIL HARTNELL Tribune Business Editor A LEADING Bahamian general insurer yesterday said the pre-recession 60/40 split in its auto book had been reversed in favour of third party coverage, with 2011 an "unprecedented" year for large fire-related claims that are likely to total over $20 million. Steve Watson, RoyalStar Assurance's managing director, also delivered some good news for Bahamian homeowners and businesses, telling Tribune Business that due to a better-than-expected reinsurance renewal cycle there was unlikely to be any 2012 increase in property insurance premiums. Looking ahead to 2012, Mr Watson said: "We've got two scenarios. One is a catastrophe free year, and one is a year with a catastrophe. Even if there's no catastrophe, we still have the economic issues. "Although the recent data coming out of the Us is looking good, even if that continues it will be a while before it impacts things in the Bahamas. So 2012 will still be a difficult year." For the Bahamas-based property and casualty industry, Mr Watson said that apart from Hurricane Irene-related claims payouts, 2011 was dominated by major fires, such as the ones that destroyed Automotive and Industrial Distributors (AID), the Betty K block in downtown Nassau, and the second Bay Street fire that impacted the tent Straw Market and Pompey Museum. "2011 was an unprecedented year in terms of large fires," Mr Watson told Tribune Business. "I would imagine that there was something in excess of $20 million worth of claims in five, six, seven large fires. "That's unprecedented, really. You might get one or two fires a year in the $2-$3 million range, but last year was remarkable. I can't see that being repeated in 2012. The big concerns are going to be the continued weak economy, and we're keeping our fingers crossed that there are no major hurricanes." Mr Watson told Tribune Business that the recession's impact was most evident for RoyalStar in its auto insurance portfolio. Pre-recession, its auto book was split percentage-wise 60/40 per cent between comprehensive and third party coverage policies, the former having the majority. "Now, it's the other way round," he revealed, with third party coverage accounting for 60 per cent of RoyalStar's auto insurance book. "We're growing on insured vehicle numbers; we're insuring more cars than we've ever done, but the average premium has dropped." Mr Watson said annual comprehensive auto insurance premiums had dropped from around $800 to $700, largely due to the value of the cars being insured falling. Third party premiums were holding at between $350-$400 per annum. However, the RoyalStar chief explained that the auto portfolio 'rebalancing' and drop in average premium were being balanced out by a reduction in the level of average accident claims being paid out. With the drop in comprehensive insurance coverage, RoyalStar was not having to pay out as often for both vehicles involved in an accident. The increase in third party coverage meant an increasing number of its insurance clients were only covered for damage to the other person's car, not their own. And, with many Bahamians and residents opting for used cars rather than new ones, or extending the life of their current motor, the value of other party vehicles involved in accidents with RoyalStar customers had dropped, too. This again reduced the value of claim pay outs. "The frequency of claims has not changed, but the average claims continues to come down," Mr Watson told Tribune Business. When it came to RoyalStar's overall 2011 top-line, he added: "We saw a bit of a decline on motor again, but not much of a decline elsewhere, if at all. I'd imagine the premium numbers will be fairly flat." When it came to property insurance premiums for 2012, Mr Watson indicated that reinsurers were beginning to segment the Bahamian market, with New Providence's relatively minor hurricane experiences meaning there was "no justification" for raising prices here. The relatively thin capital bases of Bahamian insurers means they have to be large quantities of reinsurance, effectively allowing the latter to dictate premium prices. But Bahamian islands traditionally impacted the most by hurricanes, such as Abaco and Eleuthera, may not be as lucky as New Providence in 2012. "The reinsurance renewals are done, and were not as bad as we thought they'd be," Mr Watson added. "We've had some increases, but not to the extent anticipated. "There was a lot of doom and gloom around in November/December, but we're fairly satisfied with the renewals we got. I would think that in New Providence there's probably not any premium increases, but possibly in Abaco and Eleuthera, and hopefully there might be some increases in Cayman. "New Providence has not been affected for some time in relation to hurricane experiences. It's been the islands around it; predominantly Abaco. New Providence has escaped pretty much unscathed, so there's no real justification based on loss experience for an increase in premium prices."