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Insurers Expect Record Loss

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

HURRICANE Matthew will likely produce the largest-ever Bahamian insurance industry loss from a single event, a top executive said yesterday.

Patrick Ward, Bahamas First’s president and chief executive, told The Tribune that the total claims payout was likely to exceed the previous record set in 2004 by the combination of Hurricanes Frances and Jeanne.

While unwilling to give figures, Mr Ward added that the property and casualty insurer - and all rival underwriters - were anticipating “a significant number of claims” from Bahamian homeowners and businesses.

And, looking to the future, the Bahamas First principal warned that catastrophe insurance costs (premium prices) were likely to rise locally as a result of the damage Matthew has inflicted along the south-eastern United States coast.

“This is probably going to be the most expensive claim The Bahamas has ever had for one single event,” Mr Ward said of the devastation inflicted by Hurricane Matthew.

Comparing the storm’s impact to the insured losses inflicted by Hurricanes Jeanne and Frances in 2004, he added: “This has the potential to exceed the payout from both those events combined.”

This means that Bahamian property and casualty underwriters are collectively looking at a nine-figure payout to storm-ravaged victims.

The insurance market’s loss is especially severe because of the track taken by Hurricane Matthew as it passed close to The Bahamas’ two main population centres - Nassau and Freeport - where coverage penetration is highest.

Few storms, especially one of Matthew’s strength, strike both The Bahamas’ main cities, the last one to achieve this being Hurricane Frances in 2004.

“I wouldn’t want to put a number on it yet,” Mr Ward said of the potential insurance payouts, “but it’s a storm that created widespread damage in New Providence, Grand Bahama, Andros and Exuma. It has caused a massive amount of damage to infrastructure, personal property and commercial property. We’re anticipating a significant number of claims.”

Mr Ward said Bahamas First had already been fielding claims inquiries from clients, and will open its office today to begin processing and receiving them. The offices of its affiliate, NUA Insurance Brokers and Agent, on Collins Avenue and Carmichael Road will also be open.

Other insurers also set to open on National Heroes Day, a public holiday, are RoyalStar Assurance and Insurance Management.

Mr Ward said Bahamas First had already met with the loss adjusters it has hired to assess damages claims, and will also “get the ball rolling” on inspections today.

“We’re fortunate to some extent that the amount of rainfall was not significant in this particular storm, which assisted with flooding impacts outside the coastal areas,” he added, “and the fact this was relatively fast-moving.”

Insurance industry sources expect the majority of the most serious claims to come from New Providence’s southern shore, and areas such as Coral Harbour, South Beach, Pinewood, Marshall Road and Yamacraw.

These communities were among those hardest hit by Matthew’s storm surges and flooding, as it raced over New Providence as a major Category 4 storm. Grand Bahama, and Freeport, are likely to be the other major claims sources, given that Matthew had gained strength when it hit the island.

Mr Ward said that with The Bahamas being among the Caribbean leaders for insurance penetration, “a significant amount” of Matthew’s damages were likely to be covered.

“We want to stress to the public that we are ready to move ahead,” he told The Tribune. “We have people in the field. At the same time, we would stress to people to take whatever steps are necessary to protect and secure their property. We can still make a determination [as to loss/damages] even if they have done some remediation actions.”

Mr Ward, though, warned that the damage inflicted by Matthew on the US coastline between Florida and the Carolinas could impact future Bahamian property and casualty premium rates.

Bahamian insurers buy vast quantities of reinsurance from the global markets to help them underwrite risks in this nation, meaning that premium rates in this nation are largely determined by foreign reinsurers.

Should Matthew create a major reinsurance market loss, that will have the effect of sparking reinsurers to demand higher prices from their partner carriers, including those in The Bahamas.

“The average consumer in The Bahamas should be prudent in anticipating there might be some movement on premiums,” Mr Ward said.

Comments

alfalfa 3 years ago

Insurance companies never lose money, and for years have increased homeowners insurance in the Bahamas, when we had no hurricane damage, but blaming it on damges and claims experienced elsewhere. Now that New Providence and Grand Bahama have been directly affected, they have an open pathway to shaft us even more. Government really should ensure that these gangsters are not allowed to rape and pillage already suffering customers.

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madsaun242 3 years ago

Insurance companies lest we forget, are in fact a business. Meaning they need to make money, they do so by selling you insurance - which you buy in case of emergency. The rates go up and down from time to time, as economies and values change. They have to be able to pay their usually highly educated staff a fair wage, as well as be able to settle any claims as needed - this is done by collecting peoples money and redistributing it as needed. It's easy to feel taken advantage of when you don't understand a system - here's a pretty good source that explains it all http://www.wikinvest.com/concept/How_...">http://www.wikinvest.com/concept/How_...

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realfreethinker 3 years ago

They will just continue to do what the government is doing to us

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southernstargazer 3 years ago

Who do these insurance companies believe that they are fooling? The word is out. Capitalizing on fear (aka natural disasters) is big business... now its time to pay out. Its time to give back some of the millions pocketed over the years.

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sheeprunner12 3 years ago

There is a big problem here for homeowners who are already struggling to pay mortgages and are forced to carry homeowners' insurance as part of the deal (like bank-funded vehicles) ........ the rates are going to increase and make the homeowners' financial balancing act even more tenuous .......... no chance to capitalize on profit goes unnoticed in the insurance world

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