By Risk Management Services

Record Hurricane Insurance Payments Made

Insurers demonstrated the robustness of their reinsurance arrangements and claims responsiveness with swift payments of most of the US$100 billion in insured losses.

The passage of Hurricanes Irma and Maria, during the worst hurricane season to date, marked the first recorded instance of two Category 5 hurricanes occurring in the same month and accentuated the need for all Caribbean territories to re-evaluate the maximum wind speeds that can now be expected and to revise and enforce building codes appropriately.

It was initially believed that reinsurers would react decisively to raise property rates across the region, however, rate increases for the first quarter of 2018 were modest following an influx of capital into the reinsurance market. Likewise, insurers have been very selective in their rate increases with those territories that are in the main hurricane pathways seeing the bulk of the increase.While some local insurers pressed for rate increases in the local market, this is yet to be realized. However, the downward pressure on property insurance rates has been alleviated with most claims-free property renewals holding their expiring rates.

Passage of the New Insurance Act

After some 12 years of review by the various stakeholder groups, the Insurance Act 2018 was proclaimed in June.

The immediate challenge for all insurance companies and intermediaries will be understanding and meeting the new requirements for capital, solvency, registration etc. particularly given the heavy penalties for non-compliance.

Trends in Motor Insurance

Heightened police checkpoints, alcohol testing and adjusted speed limits provided benefits to both the driving public and insurers with the number of major road accidents continuing its downward trend in 2017.

The trend is welcome news to a very competitive motor insurance market that is now experiencing its first local online insurance quotation comparison service. However, an alarming upsurge in motor vehicle thefts in early 2018 may temper any reduction in losses from motor accidents.

A trio of motor insurers joined forces to introduce ForenSys, a motor accident management company that collects and preserves information at the scene of serious accidents. This service is intended to help determine liability in disputed motor accident scenes.

    Main Challenges Facing the Local Insurance Industry:
  • Major underinsurance and low insurance penetration
  • Access to foreign exchange
  • New investment opportunities
  • Unknown impact of climate change
  • Lack of a national building code and enforcement
  • Increase in lifestyle diseases
  • Fraud and enforcement in motor insurance
Economic Issues

The industry continues to be affected by economic conditions with policy lapses, reductions in sums insured and a decline in insurance programmes as companies and individuals alike seek to reduce expenses. Insurers have been unable to obtain timely access to foreign exchange to pay their reinsurers and this remains a concern, particularly given the greater frequency and costs of catastrophic events worldwide. New high-yielding investment opportunities also continue to challenge the life, pension and non-life sectors.

Impact of Climate Change

For the first time, the Trinidad and Tobago government effected a policy for excess rainfall in 2017 from the Caribbean Catastrophe Risk Insurance Facility (CCRIF) and received a payment later that year for $47 million following the devastating October floods. While the cover was timely, Trinidad is still in the assessment stage of determining our climate change vulnerabilities, in stark contrast to many of our Caribbean neighbours.

Also of concern is the continued lack of development of a national building code and an enforceable small-building code particularly given the amplified warnings from the Seismic Research Unit of The University of the West Indies of a potentially devastating seismic event in the region.

Other unknowns that come with climate change are the potentials for new diseases, such as the Zika and Chikungunya viruses, and the impact they may have on the life and health insurance sectors. These sectors are also dealing with the high prevalence and mortality rates for lifestyle diseases and increasing health care costs.

Insurance Fraud and Enforcement

The non-life sector continues to struggle with its image as the pervasive issues of fraudulent motor insurance certificates and ‘PH’ vehicles go unresolved. Motor insurers are blamed when they deny claims brought by injured third parties in these instances. The lack of progress in establishing the administration of the fund for victims of uninsured motor vehicles means that an increasing number of innocent parties will go without compensation for debilitating injuries. With one major legislative matter behind us, the industry hopes that the focus can now move to a quicker resolution of these remaining issues.

T&T Property Insurers – Premiums vs Claims Insurance Insurance View Companies Related to Insurance - Who's Who