on July 5, 2013 by admin in Insurance Industry, Comments (0)

High premiums sustain local insurance industry

Despite the ongoing global economic slowdown, the local insurance industry has been enjoying tremendous growth, thanks to high premiums charged to local residents.

According to the Cayman Islands Monetary Authority’s Annual Report 2012, “between 2005 and 2011, the Cayman Islands domestic insurance market grew from CI$220 million to $380 million and so far more has contributed to the economy more than insurance industries of most other countries did theirs.”

The report revealed that the class A licences at the end of the 2011-12 fiscal year numbered 27. No new ones were issued, although two were cancelled.

In addition to the 12 insurance agent licenses issued during 2010-2011, tow more agent licences were issued in 2011-2012.

“These reflect additions to the sales force of class A companies and demonstrate the increased interest by those companies involved in the sale of life insurance in having a dynamic and growing sales force,” the report read.

The domestic market is comprised of insurance companies both locally incorporated and branches of foreign companies and intermediaries (brokers and agent) and business written directly or through the brokers and agents.

Domestic insurers provide a range of coverage to local policyholders with property, health and life being the top three categories accounting for 70 per cent of the premiums earned by the sector for calendar year 2011.

Health insurance, which is compulsory for foreign workers, accounts for 52 per cent of the industry, with net earned premiums of $162,761,000. This is followed by aviation, which posted premiums of US$40,594,000. Property insurance ranked in third position, with US$33,194,000. Life insurance accounted for US$21,801,000.

On health alone, each resident, including status holders and unemployed Caymanians pays CI$2,716.68 per year. Should these be removed, the average insurance per capital would be much higher. This figure has been arrived at by dividing the premiums earned by the number of residents, estimated at 60,000.

Cayman domiciled captive insurance companies holding class B licenses do not directly compete for the Cayman residents market.

The Insurance Law of 2010 was passed in the Legislative Assembly in September of that year. However, its implementation was deferred to coincide with the issuing of supporting regulations.

This law demands stricter reporting requirements for class A insurers and a restructuring of class B insurers.

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Article source: http://caymannetnews.com/2013/07/05/high-premiums-sustain-local-insurance-industry/

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