Constraints regarding costs and capacity have begun to moderate for Caribbean insurers, amid an accelerated softening in property reinsurance pricing and a modest relaxation in some terms and conditions, according to a recent AM Best report.
For regional insurers, this shift, combined with aggressive rate adjustments, has paved the way for a streak of profitable results.
This has been the result of discipline pricing and a quiet 2025 hurricane season, the report notes. Over the past two years, insurers have adjusted rates to match the cost of reinsurance, as well as inflationary pressures on repair costs in the property and motor business segments.
Storm activity has always been volatile and can rapidly shift market dynamics, requiring constant vigilance from insurers regarding their risk appetite and growth goals.
Fortunately, the Caribbean region experienced a reduction in such activity in 2025 compared to the previous year, with many storms tracking away from land and remaining out to sea.
“Single island insurers are at most risk for taking on too high of a market share for property business,” said Bridget Maehr, director, AM Best. “Some are looking at geographic expansion to balance their risk profile, especially on islands that have lower exposure to catastrophe events.”
According to the report, Caribbean insurers have reported favourable collective operating and net earnings over the past three years, with most successfully transitioning to IFRS 17 since 2022.
This shift led to a material increase in insurance service revenues, up 12.0% to $2.7 billion, and net insurance service revenues, up 11.3% to almost $1.4 billion, for AM Best-rated non-life insurers in 2024.
The report also notes that operating expenses are pressuring the earnings of Caribbean insurers; net operating & other expenses also continue to rise.
While the internal insurance dynamic looks positive, the region’s broader economic picture remains linked to global volatility.
AM Best states that the Caribbean’s heavy reliance on tourism and commodity exports makes it hyper-sensitive to external shocks from major markets.
“As a result of these factors, ongoing global uncertainty, stemming from persistent external shocks and shifting international policies on trade and immigration, pose downside risks through its impact on commodity markets, remittances and tourism flows from major source markets in the United States, Canada, and Europe,” said Ann Modica, director, AM Best. “This is reflected in increased uncertainty and depressed regional economic performance.”
