The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamian insurers yesterday expressed confidence that claims arising from Hurricane Joaquin would not reach the $50 million-plus level generated by recent storms such as Sandy and Irene.

Patrick Ward, Bahamas First’s president and chief executive, told Tribune Business that the Category Four storm was “not going to be a significant” claims event for the property and casualty industry despite the devastation inflicted on the impacted islands.

He explained that this was because the five worst hit locations - Long Island, Rum Cay, San Salvador, Acklins and Crooked Island - all had small populations where insurance penetration, and exposure, was probably the least.

“Obviously our hearts and minds are with the people significantly impacted by this,” Mr Ward told Tribune Business, “but it’s fair to say that the areas impacted are not the most densely populated, and are not where insurance penetration is at its deepest.

“We’ve already had a number of claims filed, but are not expecting a significant frequency [volume] at all. But they are going to be severe in terms of the extent.”

Mr Ward said ongoing communications problems with the southern and central Bahamas in the storm’s aftermath had made it impossible for Bahamas First to get a reliable indication of the expected number, and size, of claims expected.

He added, though, that most would be related to housing and property damage, plus losses suffered by businesses and commercial enterprises.

“I’m sure there are a lot of cars subject to flooding as well, but in those areas I don’t think a lot of them will have comprehensive coverage,” Mr Ward added.

“It’s not likely to be a big claims impact. I think the economic impact is going to be pretty significant, but overall the insurance specific claims are not going to be very significant. I don’t see the insurance losses.”

The general rule is that the further south you travel from Nassau, the less the level of insurance coverage and penetration. This means that many residents whose homes, vehicles and businesses that suffered damage, or are total write-offs, will have to rebuild or replace those assets via their own resources or whatever hurricane relief comes their way.

While total insurance claims stemming from Joaquin were likely to reach into the “tens of millions” of dollars once foreign insurers writing business in the Bahamas were factored in, Mr Ward said insured losses were likely to total less than recent hurricanes that had struck this nation.

Both Hurricane Irene in 2011, and Hurricane Sandy in 2012, had resulted in collective insured losses of more than $50 million for the Bahamian property and casualty industry.

“We’re expecting this to be lower in terms of overall costs than Sandy or Irene,” Mr Ward told Tribune Business.

“We are going to work expeditiously to settle claims as quickly as possible so people can get their feet back on the ground and are able to get up and running quickly.”

Mr Ward’s assessment was backed up by Tom Duff, Insurance Company of the Bahamas (ICB) general manager, who said: “I would expect it to be less than Sandy or Irene; that’s my gut feeling, based on what we’re seeing and looking at what our exposures are.”

He added that ICB had yet to receive any claims due to the absence of communications with the affected islands, although several were expected.

“It traversed the islands with probably the smallest exposures for the industry,” Mr Duff told Tribune Business of Joaquin.

“Of the five islands affected, they’re all fairly modest in exposure terms. I don’t think it’s going to be a substantial loss for the industry because of the finite exposure in those islands.

“We know what our exposure is for those islands, and it’s not significant; not substantial from ICB’s perspective,” he added. “We’re confident it’s not going to be a major event for the company.

“We’re relieved that the hurricane didn’t veer towards Abaco, Eleuthera, Grand Bahama and New Providence. It could easily have gone that way, and we would be looking at a different picture then.”