Tuesday, May 17, 2016
Tuesday, May 17, 2016
A fast growing captive insurance sector and a plan to provide free healthcare to all Bahamian citizens demonstrate the major changes in the country’s insurance industry, finds a new report from Timetric’s Insurance Intelligence Centre (IIC).
The industry grew at a CAGR of 4.7 per cent during the review period (2010-2014) mainly due to the expansion in both the domestic and external insurance sectors.
Looking further, Timetric forecasts the insurance industry to grow at a CAGR of 4.4 per cent, to reach $1.1 billion in 2019. Stable growth in compulsory insurance classes, and infrastructure and tourism development will contribute to the industry’s growth.
However, risks also persist: high unemployment, competition and dependence on the US for tourism revenues may restrict the industry’s future development.
Captive insurance is also gaining traction.
The Bahamas is rapidly emerging as a destination for companies looking for captive insurance solutions to their risk management practices. US companies are a particularly large client base for Bahamian captives.
Captive insurance accounts for around 13 per cent of total insurance business in the country and the number of segregated captive cells rose from 65 in 2013 to 99 in 2014. The reasons behind the attraction of The Bahamas is its well-developed financial services sector, geographical proximity to the US and Latin America and accommodative regulation for captives.
In addition, the growth of captive insurance has spurred demand for non-life products. As an example, HNWIs use captives to insure significant property and asset holdings, to avoid out-of-pocket expenses to third parties.
The adoption of National Health Insurance is forecast to boost the country’s industry growth. The NHI plan is a programme that aims to move Bermuda from a system where two thirds of its citizens do not have health insurance to a system where everyone receives coverage. The government has started registration for the scheme and hopes to pass the relevant legislation for the plan through the parliament.
Commenting on the NHI model, Jay Patel, insurance analyst at Timetric said: “The NHI will significantly affect the business models of private insurers. While the initial stages of NHI are concentrated on primary care, it is expected to expand and cover all aspects of healthcare within the next decade and this raises questions of the role of private health insurance in The Bahamas.”