International reinsurers are threatening to fully withdraw from the T&T insurance market, the Association of Trinidad and Tobago Insurance Companies (ATTIC) has warned.
ATTIC said some international reinsurers have already started reducing their support here.
The comments were made in a newspaper advertisement published yesterday.
In the advertisement ATTIC said the general insurance industry in T&T, and the Caribbean region, continues to be adversely affected by events in the international insurance and reinsurance markets.
“Reinsurance rates over the last few years have been increasing. According to a report by well-known rating agency Moody’s Investor Services Inc, reinsurers have faced ‘a confluence of impacts’ on their business,” ATTIC stated.
“This includes low interest rates, more than three years of global catastrophe losses and high liability losses due to ‘social inflation’ or increased court judgements and settlements,” it stated.
ATTIC said further compounding the situation is the “ongoing uncertainty surrounding liability for infectious diseases” such as COVID-19.
“Contrary to these international trends, average property insurance premiums in Trinidad and Tobago have declined and are significantly lower than other Caribbean territories. This trend is no longer acceptable for well-known reinsurance supporters of our market,” ATTIC stated.
‘Exacerbating this situation is the long delays in reinsurers being paid because of the constant challenges faced by local insurers in accessing foreign exchange to make reinsurance payments. The combined effect has been the reduction of support by some reinsurers and the ongoing threat by others to fully withdraw from the market,” it stated.
ATTIC said that local insurers are dependent on international reinsurance for support in the event of a catastrophic event.
Reinsurance is also a mandatory regulatory requirement, ATTIC stated.
“In recognition of their unique national role in providing policyholder protection, local insurers must ensure that their operations can meet their claim obligations and remain viable,” ATTIC stated.
ATTIC said this is further reinforced by the recent proclamation of the Insurance Act 2018 effective January 1, 2021.
“The welcome new act, whilst strengthening policyholders’ protection, further increase local insurance capital requirements and operating costs. Local insurers will nevertheless continue to act in amending local rates, in a reasonable and responsible manner, to ensure that the industry continues to be in a position to satisfy its policyholders’ obligations,” it stated.