Barbadians will soon be paying more for insurance coverage.
President of the General Insurance Association of Barbados (GIAB) Michael Holder revealed this evening that the hike would affect all classes of insurance premiums.
And while the rates are yet been finalized, he said property and motor premiums could increase by between ten and 25 per cent.
However, Barbados TODAY understands that some local companies are prepared to hike their rates by as much as 30 per cent, with the changes, which are already being made, due to be fully implemented by January 1.
Sources also say that in the northern Caribbean, which was recently hit by hurricanes Irma and Maria, premiums are expected to skyrocket by between 75 and 150 per cent.
Today the GIAB head also blamed the increase on other recent natural disasters, including Hurricane Harvey and last September’s Mexico earthquake, which he said left reinsurers scrambling to recoup losses estimated at over US$100 billion.
“These are reinsurers, not only for those territories that were impacted, but also reinsurers for territories not impacted . . . like a Barbados, like a Grenada, like a St Lucia. What the reinsurers have indicated is that there will be a level of property rates increase. The extent of that is still to be determined,” Holder said, adding that costs, which were traditionally absorbed by the insurers, now had to be passed on to clients.
He also suggested that in Barbados’ case, local insurance companies were faced with added costs owing to recent tax impositions by Government.
“The insurance companies in Barbados are already bearing the cost of the foreign exchange tax levy, the two per cent; some of them are also bearing the cost of the tax on assets, the asset tax that was introduced in the Budget earlier this year; and some may even be impacted by the NSRL [National Social Responsibility Levy].
“That now, plus the increased cost of reinsurance, insurance companies cannot hold onto all of those costs themselves,” he contended.
“So it’s not a question of if rates will increase, the question has to be to what extent the rates will increase. You may see a gradual increase, in some cases as early as this month. Like now you could see . . . a quotation that you might have gotten, let’s say, three months ago, if you ask for a quotation now, you would find that in most cases, what you are being quoted would be something higher,” the GIAB spokesman explained.
Asked what would be the average percentage increase consumers were likely to pay, Holder replied: “At the very minimum you will see maybe a ten per cent [but] realistically you might see as much as a 25 per cent [hike].
“All the discussions are taking place right now, so the level of increase has not been finalized,” he stressed.
However, at least one local company, Trident Insurance, has confirmed that all classes of its insurance premiums will go up across-the-board with immediate effect.
Trident’s President and Chief Executive Officer H.C. Algernon Leacock, in a letter to industry partners dated November 2, said they had already been served notice by their reinsurance broker AON that reinsurance costs will increase by at least 25 to 30 per cent in the short term and possibly higher in the medium to longer term.
“Such substantial increases will almost certainly impact original rates in local primary markets, causing these to rise.
“Clients, however, should not despair. Since 2008, rates/premiums declined annually until they reached an all-time low in recent times. The anticipated increases should hopefully return rates to normalcy in the medium term,” Leacock said.
However, he said the hike would affect all new and renewal business going forward.
“Wherever possible, we will try to manage these increases, but our reinsurers will be anticipating meaningful increases to ensure their interests are protected and that Trident has responded by assisting them with recovering from the massive property losses caused by [hurricanes] Harvey, Irma and Maria,” the insurance executive said.