The Association of Trinidad and Tobago Insurance Companies (ATTIC), in a published statement on Wednesday, revealed that negative effects on the business has forced certain adjustments to be made to insurance rates, which have adversely affected local insurers.
ATTIC said the general insurance industry in Trinidad and Tobago and the wider Caribbean has been affected by events in the international insurance and reinsurance markets.
ATTIC said the recent proclamation of the Insurance Act 2018 which came into effect on January 1, has increased local insurance capital requirements and operating costs.
“Reinsurance rates over the last few years have been increasing,” ATTIC stated. “According to a report by well-known rating agency, Moody’s Investor Services Inc, reinsurers have faced ‘a confluence of impacts’ on their business. This includes low interest rates, more than three years of global catastrophe losses and high liability losses due to “social inflation” or increased court judgments and settlements.”
ATTIC noted that the insurance industry has been further negatively affected by the ongoing uncertainty surrounding liability for infectious diseases, including Covid-19.
ATTIC said T&T has benefited from comparatively low insurance premiums, despite the challenges being faced in the insurance market internationally. However, this can no longer be supported.
“This trend is no longer acceptable for well-known reinsurance supporters of our market. 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.”
ATTIC noted that local insurers are dependent on international reinsurance for support in the event of a catastrophic event.
“Reinsurance is also a mandatory regulatory requirement,” it added, stating that local insurers must ensure that their operations can meet their claim obligations and remain viable.
“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 a position to satisfy its policyholders’ obligations,” ATTIC stated.