Bahamas escapes potential double-digit increases in reinsurance
Bahamas escapes potential double-digit increases in reinsurance | Insurance Business Canada
Reinsurance
Bahamas escapes potential double-digit increases in reinsurance
EU tax blacklist might have necessitated alternative reinsurance sources
Reinsurance
By
Kenneth Araullo
Bahamian households and businesses were spared from facing potential double-digit increases in re/insurance costs, following the country’s successful removal from the European Union’s (EU) tax blacklist.
This development was particularly crucial for the Bahamian property and casualty insurance sector, which, according to Anton Saunders, managing director of RoyalStar Assurance, relies on German carriers for 35% of its reinsurance market capacity.
As per a report from The Tribune, the removal from the blacklist ensures continued access to vital reinsurance capacity from German carriers such as Munich Re, Hanover Re, and R & V Re.
Had The Bahamas failed to exit the blacklist by October 2024, punitive taxes and penalties would have been imposed on these carriers, significantly impacting the availability and affordability of insurance in The Bahamas.
Saunders highlighted that without this delisting, premium rates for Bahamian carriers could have seen an increase of “10% or more” due to the need to seek alternative reinsurance sources. The preservation of these reinsurance relationships allows for the continuation of projects previously put on hold by Bahamian carriers, including RoyalStar Assurance’s plans for Caribbean expansion and product diversification.
The threat of increased premiums due to a loss of German reinsurance was averted with the EU’s decision, enabling RoyalStar to maintain its commitment to not raise rates for most insureds. Saunders expressed relief that the industry could now focus on core business activities and expansion without the looming threat of increased costs due to the EU blacklist.
The Bahamian government played a critical role in this achievement, with Prime Minister Ryan Pinder KC, the attorney general, and Simon Wilson, the Ministry of Finance’s financial secretary, ensuring that all necessary steps were taken to secure the country’s delisting, it was stated.
Their efforts were recognized as pivotal in avoiding significant adverse impacts on the Bahamian insurance market and, by extension, on households and businesses across the nation.
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