NASSAU, BAHAMAS- Apart from a rise in premiums as a result of Hurricane Dorian’s destruction, some reinsurers have said they are simply not going to do business in The Bahamas, or do less business in this jurisdiction.
Summit Insurance Company’s president Tim Ingraham made the revelation at the monthly Bahamian Contractors Association (BCA) luncheon at Poop Deck West.
Ingraham said: “We have seen reinsurers say premiums have to rise and that we need higher deductibles in some areas. We had some say they are simply not going to to do business. We have had some say they are going to pull back and do less business in these areas.”
He noted that 80 cents out of every dollar local insurance firms make goes to purchase reinsurance, adding that local firms purchase reinsurance to protect against the risk of a major claims event such as Dorian.
“If you add up all the capital of all the local insurance companies it is probably just around $100 million. Obviously there is no way we can take these risks on without purchasing a substantial amount of reinsurance.
“The insurance industry thought that the maximum we we would have seen is 10-20 percent damage, with 20 percent probably being the maximum. Dorian was at 50 percent damage factors. The estimated payout is $2.5 billion. Bakers Bay is $500-$800 million. A significant amount of people were uninsured including the government.”
According to Ingraham, many homes in Abaco were insured not because the owners could not afford it but rather because they chose not to take out insurance on their property.
“Many homeowners ere millionaires and felt they had built their homes to a sufficient standard. Sometimes it’s a case of them not wanting to buy it and it not being a priority.”