Early indications on the rise of insurance premiums in the wake of Hurricane Dorian are that they could increase by 15 to 20 percent on the affected islands and also by a smaller percentage on islands not directly hit by Hurricane Dorian, Chairman of the Bahamas Insurance Association (BIA) Warren Rolle told Guardian Business yesterday.
Rolle explained that Dorian produced the largest payout – $1 billion so far – of any hurricane to date and global reinsurers will likely seek to recoup that payout through increases in premiums across the board.
“Some insurers have already put through premium increases with effect from November,” Rolle said.
“So that’s already started and I think you’ll see more insurers starting to put through those increases, if not through the rest of the year, starting in January.
“Because of the magnitude of the loss, reinsurers that are funding these losses are looking for some payback over a period of time and you will not necessarily recover the losses from premiums generated from the affected areas of Grand Bahama and Abaco.
“This is the largest loss in the history of the country, notwithstanding that only two islands were affected, so everybody will have to bear a portion of this loss, unfortunately.”
According to Rolle, insurance companies are hoping to wrap up claim processes by the end of the year.
He added that insurance companies that depend on motor policies for the bulk of their business could take a hit, as the majority of residents of Abaco and Grand Bahama who lost vehicles had only third party coverage. He also explained that some of them might not return to the island for some time and will thus insure no vehicle.
“Certainly there’s a greater percentage of third party motor policies than comprehensive,” said Rolle.
“We’re definitely going to see less motor policies, particularly in Abaco,” he said.
“A lot of those vehicles were destroyed and people won’t be moving back to Abaco for a little while, so we’ll definitely see some property aggregates decrease in Marsh Harbour, as will the number of vehicles we insure on Abaco decrease.
Rolle said the insurance industry’s primary focus at the moment is getting clients’ claims settled as quickly as possible.
“The good thing is we have the wherewithal to meet our financial commitments to our clients,” said Rolle.
“We hope to break the back of most of these claims by the end of the year.”