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Caribbean Insurance Report 2009
Business Monitor International, March 2009, Pages: 67
BMI's Caribbean Insurance Report provides independent forecasts and competitive intelligence on Caribbean's insurance industry.
The clearest differentiating factor in the Caribbean insurance sector is the marked absence of major global players. AIG in Jamaica and Trinidad & Tobago, and Spain’s MAPFRE, which has a presence in the Dominican Republic, are the only international insurers that have yet seen potential in Caribbean insurance markets. They could be missing a trick with recent progress on CSME, the CARICOM Single Market and Economy. The 12 CSME members include Jamaica, Trinidad & Tobago and Barbados, but not the Bahamas or the Dominican Republic. The Dominican Republic has a free trade agreement (FTA) with Costa Rica, El Salvador, Guatemala, Honduras, implying an intention to focus on doing business in central and South America rather than the Caribbean. The Bahamas has come under fire for not signing up to the treaty.
The first phase of CSME, implemented in 2008, enshrines the right of establishment, whereby any business from a signatory state has the right to establish and operate business in any of its fellows under the same terms and conditions as local companies. Presumably it would allow global insurers to leverage a legal presence in one signatory state to a business presence in another, but if international insurers continue to ignore the Caribbean this is perhaps a moot point. The relative absence of global insurers is compensated for by major regional groups, such as Guardian Holdings, CLICO/Colfire, and Sagicor, as well as a plethora of local insurers. The first group is in the best position to solidify their position in the sector with the advent of CSME, but the treaty could also be leveraged by high quality local insurers.
CSME could also unify a Caribbean insurance industry that is marked by wide diversity, as outlined in our previous reports. Jamaica and the Dominican Republic are lower income countries with a history of economic, financial and political instability and have under-developed insurance sectors. Barbados, as the table below suggests, is a substantial centre for offshore captive insurance, although life insurance is not especially prevalent. Authorities in the Bahamas, which it should be remembered has not signed up to CSME, is looking to rival its neighbour in the captive insurance sector by leveraging its status as an offshore banking, private banking and trust centre. Despite being the second richest country in the region (with a GDP per capital of US$19,700 compared to US$21,300 in the Bahamas), Trinidad & Tobago is has high life insurance premiums per capita but low non-life penetration.
The low penetration of insurance in the region suggests that the industry has significant room to expand, with relatively high standards of regulation (led again by Barbados with its status as a financial centre), and low country-specific risk.
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