The newly installed president of the Insurance Association of Jamaica, IAJ, is warning that insurance rates could rise due to a reprioritisation of reinsurance funds.
Sharon Donaldson, who was recently elected president at the association’s annual meeting, says some reinsurers may shift away from the Jamaican and regional market. Insurance losses not supported by adequate premiums are driving the larger reinsurance companies to do less business in the region, she said.
“What that will mean for the insurance companies in Jamaica is that we will have less capacity to provide property insurance, or if we do provide it,” added Donaldson, who is also managing director of General Accident Insurance Company.
“It will be horrifically expensive and other persons may not be able to afford it,” she said at a post-AGM gathering of IAJ members.
Were the reinsurers to leave, Donaldson said, it would lead to a shrinkage of the Jamaican insurance industry, which is made up of a dozen general insurers and six life companies.
The general insurance sector, which covers property, motor, contents and liability risk is already beset by low rates of compliance for property insurance. Donaldson says only about 25-30 per cent of Jamaican property owners purchase insurance, and this is mostly done when mortgages are involved. And only 85 per cent of the more than 500,000 registered vehicles are covered by motor insurance.
Donaldson also said that the Russia-Ukraine war and the economic embargoes have implications for financial arrangements and the movement of capital, which may affect the capacity of reinsurers to do business.
“Without expert opinion, we in the Jamaican insurance industry would say it is possible because reinsurers are capitalist by nature, and as such, they will want to move around where they can get a better deal,” she said.