By NEIL HARTNELL
Tribune Business Editor
Total Hurricane Matthew insurance payouts will “absolutely” total a nine-figure sum, a leading businessman yesterday saying “the only question” is how big the first digit will be.
Sir Franklyn Wilson, RoyalStar Assurance’s chairman, told Tribune Business that collective insured losses in the Bahamas would almost certainly exceed $200 million.
“I think we’re talking about a lot,” he replied, when asked about the likely level of Matthew-related claims, adding that the total would “absolutely” be in the hundreds of millions of dollars.
“The only question is the first figure in the nine,” Sir Franklyn continued. “I’m sure that figure, for the industry, will exceed ‘2’. Is it $300 million, $400 million?
“I’m almost positive it’s a nine-figure sum and it’s more than $200 million. Is it $300 million, $400 million, $500 million?”
Anton Saunders, RoyalStar’s managing director, was more circumspect about estimated insured losses and payouts, describing Matthew as “a very difficult storm to put a figure on at this time”.
He did, though, agree with his Bahamas First counterpart, Patrick Ward, who told The Tribune on Monday that Hurricane Matthew was likely to produce the largest collective insured loss/payout in Bahamian history.
“It definitely will be,” Anton Saunders told Tribune Business. “I don’t think he’s [Mr Ward] going to be far off.
“Not since 1929 have we had a hurricane that hit Nassau and Freeport, the two most populated areas and ones that are built up the most.”
Although Freeport, in its present form, did not come into being for several more decades, the insurance industry losses will be exacerbated by both Matthew’s path and its strength.
Few storms, especially one of Matthew’s Category Three/Four strength, strike both the Bahamas’ main cities, the last one to achieve this being Hurricane Frances in 2004.
Nassau and Freeport also have the highest penetration of insurance coverage, given their respective levels of population density and economic activity.
RoyalStar, in common with many other property and casualty underwriters, opened its offices yesterday despite the National Heroes Day holiday to being receiving and assessing storm claims.
“I know the number of claims in Freeport so far was about 100, and in Nassau it’s about 80, which we have seen and had reported,” Anton Saunders said.
“Because it’s a holiday, we are not sure that the word is out sufficiently that we are open, so we have to see in the normal business days to come what the influx will be.
“We’re expecting a little more this week, the flow will increase, and we will have a very good idea on the residential property portfolio side what we can expect by the end of the week.”
Anton Saunders said “the severe losses” on New Providence were expected to be concentrated in the island’s south-east, which was hard-hit by flooding stemming from Matthew’s storm surge.
The RoyalStar chief said it typically took longer for businesses to submit their hurricane-related insurance claims, as they were more concerned with securing their premises and inventory for a return to operational status.
He revealed, though, that the Bahamian property and casualty industry was concerned about “the timing” of the multi-million dollar Value-Added Tax (VAT) reimbursement it will be due on the Matthew claims payout.
“All of us are concerned about the VAT element, and how that is dealt with efficiently between us and the Government,” Anton Saunders told Tribune Business.
“All insurance is VAT-able, and the Government will have to reimburse the insurance companies for the VAT that is incurred on these claims.
“That number is going to be dependent on the size of the loss; anywhere between 7 to 7.5 per cent.”
Anton Saunders said the Government would likely reclaim the VAT insurance reimbursement through the recovery-related purchases made by those receiving claims payouts.
“It’s question of timing,” he explained. “The industry is going to be concerned about the timing of these reimbursements. You can’t expect the industry to fund your part of the 7.5 per cent. The whole industry will hopefully have a meeting with the Government, and go forward from there.”
Cedric Saunders, Insurance Management’s principal, also told Tribune Business that the Bahamian insurance industry was “looking at fairly large numbers” for Matthew-related claims payouts.
“We’re having a lot of people coming in and calling in,” he said of claims being reported to the company’s head office yesterday. “I think that will continue for the next week or so.
“We’ve got a lot of damage, but it could have been worse. We had a meeting this morning, and with very limited information it’s very hard to assess the amounts. I don’t think anyone at this time can provide the true numbers. I think you’re going to be looking at pretty large numbers.”