Best’s Market Segment Report: Caribbean Insurers’ Reinsurance Costs and Capacity Constraints Moderate, Although Climate Vulnerability Remains

OLDWICK, N.J.--(BUSINESS WIRE)--Reinsurance costs and capacity constraints have moderated for Caribbean insurers amid an accelerated softening in property reinsurance pricing and a modest relaxation in some terms and conditions, according to a new AM Best report.

These factors have contributed to favorable results being reported by most Caribbean insurers, with rate increases also contributing, especially in the motor line of business. Over the past two years, the region’s 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 a volatile factor that can alter market dynamics quickly, requiring insurers to remain vigilant over their risk appetite and business growth objectives. Fortunately, the level of this activity in the Caribbean region decreased in 2025, compared with the prior year, and many of the storms remained 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 reported favorable operating and net earnings on a collective basis over the past three years. Most Caribbean insurers have transitioned to IFRS 17 financial reporting since 2022, with few issues and minor restatements. Under this approach, insurance service revenues and net insurance service revenues increased materially for AM Best-rated Caribbean non-life insurers in 2024, with the former rising by 12.0% to $2.7 billion, and the latter increasing 11.3% to almost $1.4 billion. The report also notes that operating expenses are pressuring the earnings of Caribbean insurers; net operating & other expenses also continue to rise.

Insurers also contend with economic growth patterns across the Caribbean that continue to vary by country and remain broadly underpinned by tourism and commodity exports. This makes the region highly dependent on external demand, as many economies rely on a narrow range of foreign exchange earnings including tourism, financial services and commodities.

“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.”

To access the full copy of this Best’s Market Segment Report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=362284.

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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