Bahamas First is in talks with reinsurers over the provision of reinsurance-backed “micro insurance” products, as it seeks to streamline the firm’s product offers with more affordable solutions to improve the Island’s insurance penetration.
The insurer also pledged to work together with the incoming government to tackle the protection gap issue, after Hurricane Mathew revealed the extent of the Bahamas’ vulnerability, according to Bahamas First president and chief executive, Patrick Ward, The Business Tribune reported.
Ward told the Business Tribune; “We have engaged in discussions with some reinsurers that are global in their nature, and that have provided micro insurance options in other markets.
“We think there are possibilities that some of these solutions are suited to elements of the Bahamian market…. It will definitely move the needle if implementation is done properly, and the level of take-up depends on how committed stakeholders are to the cause.
“This is a public-private partnership opportunity that might provide a lot of benefit to people who don’t have the means to buy insurance.”
The Island is highly exposed to natural catastrophes, with its location along the hurricane belt, but has struggled with affordability and low capitalization of local insurers leading to heavy reliance on reinsurers setting premium rates.
The Tribune Business said that according to one homeowner, insurance premiums had tripled over the past 14 years, from $1,000 up to over $3,000.
Last year’s Hurricane Matthew and Hurricane Joaquin’s aftermath devastated the Island with an estimated $300 – 400 million of uninsured losses – figures which local government and insurers are now determined to leave behind with a move towards improved re/insurance solutions and uptake this year.
Bahamas First hopes to change the Island’s re/insurance game by bringing low-cost, flexible micro insurance solutions – which have already proven to be effective in other emerging markets.
Ward commented; “Our experience with Hurricane Matthew in the Bahamas proved that this coverage gap is very much a feature of the Bahamian market. This coverage gap manifested itself in the form of minor to major degrees of under-insurance, and in more extreme cases there was no insurance protection at all.”
“There’s no question that the insurance industry is more efficient at bringing a level of relief when there are hurricanes.”
“If you look at the claims paid by the insurance industry compared to the money spent by the Government initially, we bring relief to people very quickly. It shows the private sector is more efficient at bringing relief to people following a disaster.”
Swiss Re also recently highlighted micro insurance solutions as keys to the re/insurance future, saying that affordable and flexible solutions – originally designed for developing countries – were increasingly spreading to developed markets as insurtech makes uptake as easy as swiping a smart phone screen.