Most property and casualty (P&C) insurers in the Caribbean region surpassed performance expectations in 2020 despite the challenges of COVID-19, according to AM Best.
Consolidated net income more than doubled on the 2019 level last year among AM Best rated insurers, despite the pandemic weighing heavily on countries with weak public health infrastructure, limited economic resources, and dependence on tourism activity.
Low hurricane and wind activity in the Caribbean meant that the pandemic effectively served as the region’s major catastrophe in 2020.
However, despite the relatively calm 2020 hurricane season, multiple near misses and a general trend in reinsurance price increases caused by losses in prior years have affected the region’s insurers, AM Best notes.
Consolidated gross premiums for rated property/casualty insurers in the Caribbean for 2020 increased by 4.9%, reflecting continued price firming in specific territories, while net premiums decreased by 4.3%, reflecting higher cessions by some companies.
At the same time, the overall combined ratio improved by 4.1 points, to 94.8% from 98.9%, and the rated group was found to have net income of $61 million in 2020, compared with $30 million in 2019 when Hurricane Dorian created substantial losses.
Caribbean life and health companies experienced a disruption in top line growth in 2020 due to the pandemic, with a 9% decline in total revenue and a 40% decline in net income, according to AM Best.
Both life and health premiums dropped as insurers provided premium relief to policyholders while economic conditions waned owing to stay-at-home restrictions and dramatic declines in tourism.
Going forward, AM Best believes that a strong vaccine rollout in the US and UK should help tourism regain some traction.
That said, many tourism-dependent countries will be forced to balance health risks with the strain on their domestic economies at least through 2021, given that much of the domestic population will remain unvaccinated due to limited vaccine availability.
And there is always the possibility that further outbreaks of the virus could force governments to reinstate additional restrictive measures, which would continue to drag on the economy.
