OLDWICK, N.J.--(BUSINESS WIRE)--Most AM Best-rated property/casualty insurers in the Caribbean region surpassed performance expectations in 2020 despite the vast number of variables presented by COVID-19, with consolidated net income more than doubling the 2019 level. However, according to a new AM Best report, while the Caribbean was spared of significant hurricane damage during 2020, the 2021 season is off to a brisk start.
The new Best’s Market Segment Report, “Caribbean Property/Casualty Insurers Resilient Despite COVID-19; 2021 Hurricane Season Looms,” states that the COVID-19 pandemic weighed heavily on countries with weak public health infrastructure and limited economic resources to ramp up services, as well as those dependent on tourism activity to drive economic growth. A paucity of hurricane and wind activity in the Caribbean meant that the pandemic effectively served as the region’s major catastrophe in 2020. Still, 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.
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. The overall combined ratio improved by 4.1 points, to 94.8% from 98.9%. The rated group had 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. 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, a strong vaccine rollout in the United States and United Kingdom, the major sources of arrivals for the Caribbean, should help tourism regain some traction. However, 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. Further outbreaks of the virus could force governments to reinstate additional restrictive measures, which would continue to drag on the economy.
To access the full copy of this market segment report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=311375.
A panel of analysts and insurance leaders will examine current economic and industry trends in the Caribbean markets in an online Best’s Briefing, titled “Caribbean Market Perspectives from the C-Suite,” on Aug. 18, 2021, at 2 p.m. (EDT). To register, go to http://www.ambest.com/webinars/caribbean21/index.html.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
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