Caribbean Insurance Market

Part
01
of seven
Part
01

Caribbean Insurance - Current Market

Insurance in the Caribbean is largely dependent on the country in question. The Bahamas is currently dealing with the aftermath of Hurricane Dorian and as such is looking at billions of dollars in recovery costs and insurance claims. Jamaica is experiencing growth which has been brought about by tax incentives, government policies and other factors. The details are below.

Bahamas

  • The most recent hurricane to have passed through the Caribbean waters is Dorian. This system has been declared to be the worst natural disaster ever experienced in the Bahamas. The total insured losses experienced so far was no less than US$1 billion while others estimate that it is approximately $3 billion in damages.
  • In the Bahamas, the insurance industry has two sectors, the domestic and the international. The domestic market is the larger of the two and is supported by 49 international insurers and seven that are locally owned. Most insurance contracts are written up by an agent of an insurance company or a broker.
  • The market in the Bahamas has some advantages, for example, they have good professional support in terms of the legal, financial and accounting services, they are responsive to new proposals, the communication system is acceptable, and leisure activities there include sailing, snorkeling, sport fishing, tennis, golf, and others.

Jamaica


Guyana

  • The insurance industry is monitored by the Bank of Guyana. They are also guided by the Insurance Act of 2016.
  • The country treats third party auto insurance as compulsory and allows composite insurance as well as 100% FDI. On the other hand, non-admitted insurance is not allowed.
  • Some players include Guyana & Trinidad Mutual Life Insurance Company Ltd, Hand-in-Hand Mutual Life Assurance Company Ltd, and North American Life Insurance Company Ltd. General insurance companies include Caricom General Insurance Company Inc., and The Demerara Fire and General Insurance Company Ltd.

Barbados

  • An international company wanting to set up offices in Barbados must be registered under the 'Exempt Insurance Act' or the 'Insurance Act.' It is regulated by the Financial Services Commission. However, both groups of companies must have the permission of the Barbados government before applying for incorporation.
  • Some incentives under the Exempt Insurance Act includes an exemption for 30 years, US companies can deduct company taxes against their US taxes, tax concessions, and exemption from income and taxes. Additionally, there are no requirements to file tax returns, the laws are flexible and modern, there is no need for physical meetings and several others. Barbados provides a good range of professional services including legal, and accounting.
  • Some life insurance companies include Sagicor Life, Pan-American International, and Guardian Life. General insurance companies include Co-operatives General, Sagicor General and ICBL.

Belize

  • The insurance industry in Belize is regulated by the International Financial Services Commission (IFSC) and the Office of the Supervisor of Insurance & Private Pension (OSIPP). The country does not allow composite insurance, however, third-party insurance for automobiles, as well as professional liability insurance, are compulsory.
  • Additionally, insurance that is non-admitted is not legally, and reinsurers do not need a license to operate. Belize permits 100% FDI
  • Examples of insurance companies RF&G Insurance, Allied Insurance Agencies, Home Protector and Insurance Corporation of Belize.
Part
02
of seven
Part
02

Caribbean Insurance - Market Outlook

Overall, the Caribbean insurance market is anticipating upcoming growth, primarily driven by organic company growth, technology innovation and geographic expansion. In particular, many Caribbean insurers expect to see significant enhancements to their digital and technological capabilities in the near term, as well as potential threats from over-regulation and pricing pressures.

Market Growth

  • A 2019 survey of Caribbean insurance CEOs conducted by consulting firm PricewaterhouseCoopers revealed that 60% were confident or very confident about the near-term growth prospects of their insurance companies and the insurance market overall in the Caribbean.
  • To a certain extent, the growth prospects of the Caribbean insurance market were bolstered by expectations for economic growth in the Caribbean, with 34% of CEOs anticipating an improvement to the area's economic growth trajectory while 60% asserted that the Caribbean's economic outlook was stable.
  • However, many CEOs expressed concern that the growth prospects for both the insurance market and overall economic conditions in the Caribbean could vary significantly by region.
  • As such, Caribbean insurers forecasted a more "opportunistic growth" model for insurance providers, in that companies with the flexibility and investment base to take advantage of more favorable sub-markets would reap the most benefits from the overall growth in the area's insurance industry.

Three Key Growth Drivers

  • Notably, more than half of Caribbean insurance CEOs believe that future growth in the Caribbean insurance market will be driven by three factors: organic growth and price hardening (67%), technology innovations (60%) and geographical expansion (53%).
  • These growth drivers stand in stark contrast with more global views on the drivers of insurance market growth worldwide, with Caribbean insurers viewing cost containment (33%) or customer service changes such as new product offerings (27%) as significantly less likely to influence profitability in the near term for the Caribbean marketplace.

Focus on Digital and Technological Capabilities

  • Building on this belief that technology innovations will be a major driver of growth in the Caribbean insurance industry, the majority of Caribbean insurers are preparing to make significant upcoming investments in digital technological capabilities (60%).
  • Specifically, Caribbean insurers view technology as an opportunity to gain an "edge" over competition.
  • While current technology investments in the area's insurance market are more focused on improving the customer experience or reducing costs, CEOs in the industry predict that longer-term investments in technology will help introduce new business models to the insurance industry.

Threat of Over-regulation

  • Meanwhile, the greatest area of concern for the Caribbean insurance market going forward is the potential for over-regulation or more onerous compliance requirements.
  • Almost all Caribbean insurers are at least somewhat concerned with this potential threat, while a near majority of Caribbean insurance CEOs are "very concerned" about potential issues surrounding future regulation and compliance changes.
  • According to one CEO, many Caribbean insurance companies still view compliance as an "overhead" expense, and the industry as a whole needs to move to a place where compliance is a "core-competence."

Threat of Pricing

  • Finally, "nearly all" Caribbean insurance companies view pricing as a concerning threat to the industry, both in terms of retail pricing as well as reinsurance costs.
  • In particular, one CEO commented that growth and profitability are becoming increasingly challenging in the Caribbean insurance market as the spread between the cost for reinsurance and the prices that insurers can charge clients continues to narrow.
  • As such spreads continue to compress, and with expectations for ongoing low interest rates, pricing is forecast to represent an ongoing challenge for the Caribbean insurance market for the foreseeable future.
Part
03
of seven
Part
03

Caribbean Insurance - property and casual insurance

Massy United Insurance, Guardian General Insurance and Bahamas First General Insurance are some of the key property and casualty companies in the Caribbean. The following information presents some details about each company.

Massy United Insurance

Guardian General Insurance Ltd.

  • Guardian General has the highest number of GPW in the Caribbean region (181,401). Even though it endured some losses, the company still managed to maintain a low compared ratio in 2018.
  • The company’s total revenue from property and casualty business net written premiums was roughly $115 million in 2018.

Bahamas First General Insurance

  • Bahamas First General Insurance has an A- Financial Strength Rating (FSR) and is the company with most Gross and Net Premium Writing in the Bahamas. With a combined ratio of 87.6, the company had $46.797 million in Underwriting Income in 2018.

Research Strategy

To provide some of the key property and casualty insurance companies in the Caribbean, the research team located A.M. Best Market Segment Report, which offered several critical metrics for insurance companies, such as GPW, NPW, ICR, FSR, and Net Income for 19 providers in the Caribbean. The report did not disclose revenues but included the companies ratings, net income and outlook. We utilized the number of Premiums Written (NPW and GWP) and Combined Ratios, as they are commonly used to measure a company’s success in the business, associated with the revenue and net income to determine the significant providers.

The companies selected have a combined ratio below 100, high number of premium writing, positive net incomes; gross written premium was the main factor in selecting the first six companies. Our next step was to select the six companies with the highest scores and individually research their revenues to determine the top three. Some companies aggregated revenues of different segments together, such as insurance and other financial services, while others only presented the underwriting income. When available, the specific revenue was provided; otherwise, we offered the best insights at our disposal, such as total revenue or profit before tax.

Some clarification is necessary. Most of the financial statements are published using the local currency, we converted the figured to dollars, using the exchange rate in 12/03/2019. Another explanation required is regarding the exclusion of two companies La Colonial and Island Heritage. La Colonial was excluded because its last official financial statement was from 2015. Since the research team used official sources for the other companies, we excluded this one to avoid conflicts and discrepancies from databases. Island Heritage has a high GWP but one of the lowest NPW, which is why it was excluded.
Part
04
of seven
Part
04

Caribbean Insurance - life & health insurance

Sagicor Life Inc. and Guardian Life of the Caribbean Ltd. are the key life & health insurance companies in the Caribbean based on revenue.

Sagicor Life Inc.

Guardian Life of the Caribbean Ltd

RESEARCH STRATEGY

To determine two of the key life/health insurance companies in the Caribbean, the research team sought for pre-compiled lists of life/health insurance firms in the region, as ranked by revenue. AM Best, a credit rating agency that focuses on the insurance industry, most recent research on the life/health insurance market in the Caribbean, presents us with the top firms based on 2018 revenue.
Part
05
of seven
Part
05

Caribbean Insurance - P&C Competitive Landscape

Massy United Insurance, Guardian General Insurance Limited, and Bahamas First General Insurance Company Limited, which were previously identified as key players in the Caribbean property and casualty insurance market, are based in Barbados, Trinidad and Tobago, and the Bahamas, respectively. The competitive advantages of these companies range from excellent customer service and strong financial performance to extensive market experience. These companies have websites and social media accounts through which customers can be acquired, but customers are acquired mostly through agents.

Massy United Insurance

1. Company Location

2. Competitive Advantage

  • The company's competitive advantage lies in its strong balance sheet, excellent credit rating, sound customer service reputation, and wide market reach.
  • The company has been rated A- or Excellent by credit rating agency A.M. Best for fourteen consecutive years now. Last July 2019, A.M. Best gave the company an Excellent rating for its strong balance sheet, satisfactory operating performance, sensible enterprise risk management, and neutral business profile. Reserves, liquidity, and reinsurance were all deemed adequate.
  • The company's reputation for providing excellent customer service, being responsive, and being one of the top five players in the Caribbean property and casualty insurance market gives it an edge over its competitors. The company's association with its parent company, the Massy Group, whose more than 60 subsidiaries make it one of the biggest conglomerates in the region, gives the company a competitive advantage as well.
  • Its wide reach across the Caribbean makes it a formidable competitor in the market. To date, the company, with its agency network and branch operations, has a presence in 19 territories across the region.

3. Customer Acquisition Strategy

  • The company acquires customers through its dedicated agencies and branch operations. Its overarching strategy is to maintain its reputation as a trusted partner that provides both excellent customer service and superior insurance protection.
  • The company recently entered the Jamaican general insurance market to widen its reach and acquire more customers.
  • Through its colorful posts and uploads, the company encourages its followers or subscribers to call or visit its website for a quote. The company has 21,762 followers on Facebook, 1,832 followers on Instagram, and 57 subscribers on YouTube.
  • The company runs ads as well. On Facebook, it currently has seven active ads.

Guardian General Insurance Limited

1. Company Location

2. Competitive Advantage

  • The company's competitive advantage is the fact that the company is the biggest indigenous player in the Caribbean property and casualty insurance market.
  • As the company's presence encompasses 21 territories in the region, it is quite easy for customers to reach the company through either an affiliate or an agent.

3. Customer Acquisition Strategy

Bahamas First General Insurance

1. Company Location

2. Competitive Advantage

  • The company's competitive advantage is its years of experience in the general insurance market of The Bahamas. The company, whose origin can be traced back to 1982, prides itself in the fact that it is the first general insurance company to be headquartered in The Bahamas.
  • The company considers itself a pioneer in many ways. Apart from being the first general insurance company to be established in The Bahamas, it is also the first general insurance company in The Bahamas and the broader Caribbean to receive an Excellent rating from A.M. Best., the insurance industry's primary rating agency, in the aftermath of hurricanes Jeanne and Frances in 2004. This demonstrates the company's financial ability to withstand the constant threat of catastrophic weather in the region.

3. Customer Acquisition Strategy

  • Bahamas First aquires customers mainly through its authorized agents and brokers. It has 22 authorized agents and brokers to date.
  • The company hardly uses social media to acquire customers, as it has a very limited social media presence. It only has one social media account, a Facebook account, but this account has only 910 followers. Also, it currently has no active ads on this account.
  • Acquiring agent or broker insurance portfolios is another way the company acquires customers. The company recently acquired two insurance client portfolios, namely, those of CMA Insurance Brokers and Agents Ltd. and Response Insurance Agency. These client portfolios will be merged with that of Bahamas First's subsidiary, NUA Insurance Agents and Brokers.
  • This strategy of expanding the client portfolio by acquiring insurance agencies or brokers has been described as the company's long-running strategy.

Research Strategy

We were able to prepare a competitive landscape by examining the companies' websites, press releases, reports, and other social media accounts, and by consulting third-party articles and reports about these companies.
Part
06
of seven
Part
06

Caribbean Insurance - L&H Competitive Landscape

Guardian Life of The Caribbean Limited and Sagicor Life Eastern Caribbean Inc. are located in Trinidad & Tobago and Saint Lucia, respectively.

Guardian Life of The Caribbean Limited

Location

Competitive advantage

  • The firm's "geographical spread across the region differentiates it from its competitors." Hence, in spite of catastrophic events, it's able to offer "multi-regional customers a greater reach and a well-balanced portfolio."
  • Guardian Life of the Caribbean is customer-focused, "investing significantly in digital technology, online systems, distribution channel expansion, product innovation, and automation."
  • The firm is the "largest life insurance provider in the region with over 250,000 policies and assets in excess of $3.5 billion under management."

Customer Acquisition Strategy

  • The company uses analytics and "actively pursue alliances and acquisitions" to target and reach new customer segments.
  • In 2017, Guardian Life of the Caribbean, as part of a new customer strategic plan, started implementing operating ratios that were intended at growing their customer base "through enhanced customer experience."
  • The firm's plan also includes improving operational efficiency, innovating & leveraging a wide range of portfolio solutions to attract individual and corporate clients.

Sagicor Life (Eastern Caribbean) Inc.

Location

  • Sagicor Life (Eastern Caribbean) Inc. is headquartered in Saint Lucia and currently operates in the following Caribbean countries: Antigua and Barbuda, Dominica, Grenada, St. Kitts and Nevis, St. Lucia, and St. Vincent & the Grenadines.

Competitive advantage

Customer Acquisition Strategy

  • The life insurance product offered by Sagicor leverages diverse portfolio plans (Critical Illness Plans, Endowment Plans, Non-Medical Plans, Specialty Plans, Term Life, and Whole Life Series) focused on reaching and growing its customer base.
Part
07
of seven
Part
07

Caribbean Insurance - Key Innovations

Key innovations in the Caribbean insurance market include parametric and decentralized insurance, mobile microinsurance, usage-based insurance, and an emergency dispatch service application.

Parametric and Decentralized Insurance

  • Parametric insurance is insurance where the payout schedule and payout amount are determined or triggered by predefined parameters. Decentralized insurance, on the other hand, is insurance developed by individuals or small groups instead of large, traditional insurers.
  • Etherisc, a Germany-based startup that has created a blockchain protocol for the development of decentralized insurance applications, announced in April 2018 that two ethereum developers got in touch with them for the development of a policy that will provide hurricane damage coverage for people living in the Caribbean.
  • These two developers were Jonathan Gonzalez and Renat Khasanshyn of Puerto Rico, who are both "keepers on the Etherisc network." They co-founded the Puerto Rican startup HurricaneGuard.
  • Demand for such a policy arose when low-income households and small businesses in the region that were affected by Hurricane Maria reported problems such as claim denials and payment delays.
  • According to Etherisc, the new policy will be cheaper and more transparent. Because of embedded smart contracts, insurance payouts will be automatic and will be a function of predefined weather parameters. Although the policy will not provide full coverage, it will give affected individuals the "immediate infusion of cash" that they need.
  • For example, for monthly premiums of at least $10 per month, insured individuals will receive predefined payouts of at most $9,000 within 24 to 72 hours of a major hurricane landfall.

Mobile Microinsurance

  • Mobile microinsurance is insurance designed for the most vulnerable or undeserved individuals. Transacted through mobile technology, it targets people belonging to low income brackets.
  • Sweden-based BIMA is one of the companies offering microinsurance in the Caribbean region. It is already present in Haiti, which, according to the World Bank, is part of the Caribbean.
  • Microinsurance processes are more efficient because, unlike traditional insurance processes, they do not require large amounts of information. Additionally, since processes are transacted on mobile devices, there is no paperwork involved.
  • BIMA provides life insurance, health insurance, and personal accident insurance for the underserved. Over 90% of its customers survive on fewer than $10 per day.

Usage-Based Insurance

  • Usage-based insurance, otherwise known as black box insurance or telematics insurance, is insurance whose premiums are based on current usage behavior instead of historical performance. It has obvious applications in motor insurance where motorists are matched with premiums commensurate with their current driving behavior.
  • Croatia-based Amodo, which is known for its connected platform that enables insurers and brokers to customize products and services according to behavior and usage data, is already available in Trinidad and Tobago, a Caribbean country.
  • Amodo collects behavioral data and provides the technology companies need in applying or utilizing insurance telematics.

Emergency Dispatch Service Application

  • This emergency dispatch service application is an application that gives insured individuals access to emergency services.
  • Sagicor Life Jamaica recently partnered with First Responders Technology Ltd to give its group health insurance policyholders access to the latter's pioneering First Alert emergency dispatch service application.
  • To access emergency services, policyholders only need to key in their unique access code. So far, Sagicor Life has already deployed over 10,000 unique access codes to policyholders via their employers.
  • The application is "the first of its kind" in Jamaica.

Research Strategy

In identifying key innovations in the Caribbean insurance market, we first checked if there are articles or reports in the public domain that readily list these key innovations. We were unable to find any, however, so we proceeded to look for insurance startups, insurtech companies, or non-traditional insurance market players that were either founded in the Caribbean or have recently entered the Caribbean market. This change in tactic proved effective, as it led us to innovations involving the following companies: Etherisc, BIMA, HurricaneGuard, Amodo, and the Caribbean Catastrophe Risk Insurance Facility.

We checked how traditional insurers, such as those included in A.M. Best's report, innovate, but unfortunately, this strategy produced very limited results. We only found one innovation by a traditional insurer, and this traditional insurer is Sagicor Life. All in all, we found only six innovations, and these innovations can be grouped into four types of innovation. Parametric insurance emerged as the most prominent innovation. Three companies, namely, Etherisc, HurricaneGuard, and CCRIF, have worked on or are working on this type of insurance.
Sources
Sources

From Part 01
From Part 05