Insurance Market Overview 2015
As the insurance industry continues to evolve, we have to ensure that the business environment in which we operate remains stable. Insurance represents the second biggest influence on money supply in our economy and as such, the industry plays a significant part in the overall health of the local economy.
Rates offered by the local insurance market are largely dictated by their reinsurance costs. We are currently in a “soft market” where we are seeing reductions mainly in property lines.
The state of the reinsurance market was best described in a recent article written by Tom Cole, Contingency Underwriter at Aegis London titled “How can the Lloyd’s and London market deal with “Generation Soft” published January 22, 2014. To put into perspective, in the last ten (10) years, Lloyd’s and the London market has lived in a soft market and there are now hundreds of underwriters who have grown up only knowing this competitive rating environment. Aon Rendezvous in Miami reconfirmed ‘soft rates’ for 2015.
Insurance companies in Trinidad has benefited from this by competitive reinsurance costs and/or increased capacity resulting in a very competitive local market where maintaining market share and premium income is of paramount importance. RMS has seen this over the last 3 to 4 years with varying rate reductions dependant on the type of insurance. In addition, although Trinidad is now considered south of the hurricane zone and coupled with quiet hurricane seasons regionally has assisted in competitive rates.
Locally, whilst there were no reported catastrophic events, there were four (4) fairly large fire losses in 2011. In 2012, 2013 and 2014 there was major flooding and landslip in West Trinidad and other parts of the country, however many of the affected homes and businesses were not insured.
The forecast for 2015:-
Many companies both Insurers and Brokers continue to incur increased operational costs from additional staff and technology to meet the demands of regulatory requirements from Anti Money Laundering/Combating Terrorist Financing, the pending Insurance (No. 2) Bill, 2013 and improved client service delivery. We anticipate some market consolidation amongst some insurers and Brokers.
Financial Sector Regulation
The Insurance (No. 2) Bill 2013 was referred to a Joint Select Committee (JSC) who reviewed submissions from the Insurance Brokers Association, ATTIC, the Bankers Association, ICATT,
Lloyds, the FIU, a few insurance companies and private citizens. With the assistance of one foreign and three local consultants, the JSC conducted a clause by clause review of the proposed legislation between December 2013 and July 2014, referring several clauses to the Central Bank for further revision. The JSC commented in writing on 14 of the 18 clauses brought up by the Brokers Association. It is anticipated that once the revisions are complete, the progress through Parliament will be swift.