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, according to a new report from business information service Timetric.
The industry grew at a compound annual growth rate (CAGR) of 4.7 percent during the review period (2010-2014), mainly due to the expansion in both the domestic and external insurance sectors, according to a report from Timetric’s Insurance Intelligence Center (IIC).
Looking further, Timetric forecasts the insurance industry to grow at a CAGR of 4.4 percent, 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, said the report.
Timetric said 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 percent 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, said the report.
In addition, the growth of captive insurance has spurred demand for non-life products.
The adoption of National Health Insurance (NHI) 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.
Jay Patel, insurance analyst, 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.”
Timetric, Captive insurance, Jay Patel, The Bahamas, North America