By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamian insurers were yesterday nervously watching Hurricane Helene’s progress amid fears it could negatively impact supply and property coverage premium prices for this nation’s consumers.

Anton Saunders, RoyalStar Assurance’s managing director, told Tribune Business that the international reinsurers upon whom this nation’s property and casualty underwriters heavily depend typically “lump” The Bahamas with Florida when it comes to determining which risks they will support.

With Helene developing into a huge storm near Category Four strength as it approached Florida’s west coast and Panhandle at press time, he warned that any multi-billion losses inflicted there and elsewhere could prompt reinsurers to reduce capacity - their willingness to underwrite risks - in both The Bahamas and wider Caribbean in 2025.

While the storm’s impact is too early to predict, Mr Saunders told this newspaper that the Bahamian property and casualty market likely faces “two scenarios”. In the most optimistic one, he said reinsurers will recognise that this nation’s construction standards and claims settlement process are more robust than Florida’s, which may entice them to switch some capacity here in 2025.

This would enable Bahamian carriers to underwrite more risks and reduce the pressure for further hikes in premium price, which have increased by as much as 20 percent since 2022, due to the extra reinsurance supply to provide market with a little breathing space.

However, the RoyalStar chief added that the second potential outcome would be no change in reinsurance capacity for The Bahamas and wider Caribbean but pressure for premium prices to increase for catastrophe and all-perils property insurance. This pressure would come from reinsurers seeking to recover Helene-related losses in the US.

The premium costs concerns came as Bahamian insurance brokers revealed they have warned their underwriter clients that property and casualty coverage affordability is already increasingly being pushed beyond the reach of many businesses and households.

Bruce Ferguson, the Bahamas Insurance Brokers Association’s (BIBA) president, told Tribune Business that while premium rates had only gone up around 5 percent in 2024 this had still proven “the straw that broke the camel’s back” for some clients. He added that amid complaints of higher costs, increased tax demands and greater electricity bills, insurance was “sometimes the first thing to go”.

Businesses and homeowners paying mortgages cannot escape the need to take out full catastrophe cover as it is a condition of their loan. But Bahamian property and casualty underwriters must acquire huge amounts of reinsurance annually because their relatively thin capital bases mean they cannot cover the multi-billion dollar assets at risk in this nation, thus making them dependent on global support.

“I am sure that any credible insurance company and executive management team is watching this storm very closely and the aftermath of it is going to be more important,” Mr Saunders told Tribune Business of Helene.  

“If we compare this to 2022, when the market really shifted after Hurricane Ian hit Florida, and capacity was lost in the region as a whole and prices went up... we don’t know how bad Helene is going to be but I don’t think it will be greater than Hurricane Ian.”

Recalling that Ian’s insured losses were around $40bn, Mr Saunders said the scale of this payout prompted the reinsurance industry to look at “pulling out of unsustainable regions” such as storm-ravaged Florida and the Caribbean and “if they stay in these regions they’re going to jack the price, it will be what it is, and take it or leave it”.

He explained that the premium cost increases imposed on Bahamian businesses and consumers were designed to enable the global insurance industry, and especially the reinsurers, to cover losses associated with a multi-billion storm payout. “Therefore, there would be no knee jerk reaction,” Mr Saunders said of the rationale for this.

“But if this rate increase from 2023 and 2024 is not adequate to take care of this major storm [Helene] then there will be a problem. We compete for capacity with Florida. We’re lumped in together but we compete with them for the same reinsurance capacity.”

The RoyalStar chief added that, if reinsurers took a worse-than-anticipated beating from Helene, they “might say we’ve had enough in Florida, and cut back capacity in Florida and give more to the Caribbean.

“They will know the high risks in the Caribbean, but realise the quality of the product is a little better than Florida construction wise and the claims process is quicker; not as litigious as Florida,” Mr Saunders added. “But I believe what’s going to happen is it’s going to be status quo on capacity for the Caribbean but there will be pressure to increase prices because of this.

“It’s not great news for us. We need more [reinsurance] capacity. The economy cannot grow without reinsurance support. We have to get capacity to ensure we support the assets of our customers. Within reason we will pay for capacity.”

Mr Saunders said what is most concerning about Helene is the projection that it will inflict damage and insured losses in other US states besides Florida, including Georgia. “We are all nervous, but I am sure those people who write North American wind are more nervous,” he added.

“I think one of two scenarios happens, but we hope the status quo in capacity remains and whatever market is there, an increase in price or status quo, we’ll deal with it at that time.” Mr Ferguson, BIBA’s president, added of the potential Helene fall-out: “It is concerning, obviously. We were just hoping capacity was going to come back and we could start writing new business again.

“It’s very much a wait and see position to see how this storm pans out and what stance reinsurers will take in the upcoming renewal season. They start talks in late October. Last time I checked some local insurers had some limited capacity and some didn’t. Obviously we as brokers would be very happy if we could place all the insurable risks clients present to us.”

Acknowledging that it was too early to determine Helene’s impact, Mr Ferguson added: “We have been preaching to insurers that there is a limit beyond which people will not go. If you keep putting prices up year after year, and in insurance the reasons are often valid, people will not pay.

“This year, although prices have only gone up 5 percent, in some cases this has been the straw that broke the camel’s back. People said the economy is still spotty despite getting back from COVID, and with the increased bills and taxes they have to pay, higher electricity bills they have to pay, insurance is sometimes the first thing to go.

“It is straining people. Brokers like to see prices coming down in an ideal market, but we don’t see that happening in the near future.” Tourism industry executives yesterday said Helene’s impact on Florida and other key source markets was having no noticeable impact on visitor arrivals and outbound travel despite reports of 1,600 US flights being cancelled and 20,000 delayed.

Robert Sands, the Bahamas Hotel and Tourism Association (BHTA) president, told Tribune Business: “There’s been nothing at all at this time. We do pay attention, but no impact to New Providence at this point in time.”

Jan Knowles, Nassau Airport Development Company’s (NAD) vice-president of marketing and commercial development, said of activity at Lynden Pindling International Airport (LPIA): “At 4pm our operations team advised that airport operations today went smoothly.

“There were no flight cancellations and minimal delays. We will continue to monitor any weather impacts and keep the general public advised through our various social and other media channels.”