BASSETERRE, St. Kitts – INSURANCE in the Caribbean has been given a very low grade in the Caribbean Insurance Report 2010, being described as “something of a backwater” as it relates to market requirements.
The recently-issued report, carried out by Business Monitor International, reveals that although there is a market of millions for insurance, the product and market remain “underdeveloped” with the exceptions of non-life insurance in Jamaica and life insurance in Trinidad & Tobago.
It was observed in the report that international insurance companies like AIG, which has small operations in Jamaica and Trinidad & Tobago, and Spain’s MAPFRE, which owns a number of businesses across Latin America, are found in some Caribbean countries. However, these are the exceptions to the general rule that “major multinational insurance companies have little representation on the ground”.
“In general, it is local institutions – like Seguros Banreservas in the Dominican Republic, Jamaica International Insurance in Jamaica or RoyalStar in the Bahamas – or regional groups – such as the Trinidad & Tobago-based Guardian Holdings or the Barbados-based Sagicor Financial that dominate,” the report revealed.
A significant factor that has also complicated the region’s insurance competitive landscape, as noted in the report, was the financial problems of the Trinidad-based Colonial Life Insurance Company (CLICO) and British American Insurance Company (BAICO).
The struggles of these insurers weakened the region’s financial sector and gave a wakeup call to policymakers and government ministries to quickly address the deficiencies of the sector.
Since then, the values of the insurance companies’ bond portfolios took a deadly blow from major agencies downgrading the outlooks of regional countries.
The Bahamas and Barbados have, however, shown significant progress in developing their financial sectors by increasing and improving existing services.
“The Bahamas is a long-established leader in offshore trusts and private banking and a successful player in hedge fund administration and domiciliation. Detailed estimates of the size of Barbados' offshore captive insurance community are few and far between, but indicate that annual premiums amount to about US$2 billion,” the report reads.
The report did note, however, that significant competition has been felt from the Cayman Islands and the British Virgin Islands in fund domiciliation and offshore banking and Bermuda in insurance.
