PHILIPSBURG–Insurance premiums for hurricane, storm, flood and overflow of the sea etcetera are likely to increase due to the enormous losses reinsurers will pay as a result of Hurricanes Harvey, Irma and Maria as well as the earthquakes in Mexico, NAGICO Chief Executive Officer (CEO) Dwayne Elgin and Chief Strategy and Development Officer Kyria Ali said.
The two officials told The Daily Herald that indications are that there will be an increase. “We have already noted rate increases in some territories and stabilization in others within the region.”
According to the officials, rate increases in the insurance industry are primarily driven by changes in the price of reinsurance cover and or loss experience of insurers. They said the market has not experienced a rate increase for a prolonged period of time. “In fact rates have fallen by as much as 40 per cent over the past five years despite the region being impacted by hurricanes, such as Gonzalo, Erika and Matthew, during this time. Insurers and reinsurers have absorbed these losses which has been a benefit for all policyholders.”
Recently though, they said, many of the world’s largest reinsurers have issued profit warnings as a result of the enormous losses which they will pay as a result of Hurricanes Harvey, Irma and Maria as well as the Earthquakes in Mexico. “It is very possible therefore, and reasonable to expect that reinsurers will increase the cost of providing protection to insurers in order to appropriately price for the risk they assume; such a move could cause a ripple effect. Indications are that premiums for hurricane, storm, flood and overflow of the sea etcetera will go up,” the two officials said.