By NEIL HARTNELL
Tribune Business Editor
Total insured losses from Hurricane Joaquin will likely total between $25-$30 million, Tribune Business was told yesterday, with the sector set to reassess its underwriting approach following the storm.
Patrick Ward, Bahamas First’s president and chief executive, said that while the property and casualty insurer was still calculating its own Joaquin exposure, its total claims would be “north of 100”.
He added that damage inflicted by the Category Four hurricane would likely cause the Bahamian insurance industry to examine its approach to underwriting risks in coastal areas, given the impact of “seawater inundation” in the southern and central islands.
Mr Ward, though, said it was unlikely that the Joaquin damage and associated insurance payouts would result in any increase in the sector’s reinsurance costs for 2016 - a key factor in determining insurance premium prices paid by Bahamians.
“At this point, I would say the market loss for all lines is going to be somewhere in the region of $25-$30 million,” Mr Ward told Tribune Business of the likely level of Joaquin-related claims.
“It’s definitely within what we expected. Obviously, saying that here from New Providence is one thing, but if you look very closely at the impact this has had on individuals in those areas they’d be telling a very different scenario. We’re always conscious of that.”
That sum only applies to insured losses, and is much lower than the total repair/recovery cost that the storm has inflicted on the southern and central Bahamas.
Prime Minister Perry Christie suggested that the damage was at least $60 million and rising almost two weeks ago, and the disparity between that figure and Mr Ward’s estimates reflects the relatively low level of insurance penetration in the impacted area.
Bahamas First is thought to be the Bahamian carrier with the greatest Joaquin exposure, and Mr Ward said: “Our indications are that we’ll be receiving north of 100 claims as an entity and, by this stage, we think we’ve heard from essentially everyone filing a claim.
“I can say that most of the claims reported have been seen by an adjuster; either an internal staff member, or an external adjuster retained to look after hurricane claims.”
Mr Ward agreed that Bahamas First’s Joaquin exposure, and that of the entire industry, “probably in no way compares to the number of damaged homes, vehicles and property out there.
“But it tells you about the lack of insurance, or inadequate coverage,” he added.
While Joaquin’s insured losses are much less than those incurred during either Hurricanes Sandy or Irene, the Bahamas First chief said total storm losses were “typically significantly above” those incurred by the industry.
Mr Ward said the low penetration of insurance in the Joaquin-ravaged islands stemmed from personal choices by their residents and businesses, rather than lack of product availability.
“It’s not a question of whether it’s available,” he told Tribune Business. “It’s more a question of personal choice.
“These are cases were people elect not to insure as opposed to buying insurance. There are cases where people, even though they have a mortgage, if that mortgage is below the level of the value of the land, the bank doesn’t pressure them into getting insurance.”
Mr Ward, though, suggested that Joaquin may cause the insurance industry to alter its approach to assessing and underwriting risk when it came to properties located on the coast.
“Clearly, what this particular hurricane has shown is that inundation of sea water is a very real threat, and we all have to assess how we write business to take account of these issues,” he told Tribune Business.
Still, Mr Ward said Joaquin’s losses for the insurance industry would have no impact on its reinsurance costs for next year.
“At this stage, I would have to say I do not believe these losses will have any material impact on reinsurance pricing or the provision of capacity for 2016 at all,” the Bahamas First chief added.
Bahamian property and casualty insurers have to buy huge amounts of reinsurance annually to cover the risks they take on, due to their relatively thin capital bases, thus making reinsurance the main determinant of the premium prices paid by Bahamians.