(MENAFN Press) The Jamaican insurance industry recorded a combined ratio of over 100% across all insurance segments throughout the review period. A high combined ratio has become a key concern for insurers in Jamaica.
However, in terms of written premiums, the industry recorded robust growth, backed by strong economic growth.
The insurance industry registered a CAGR of 12.6% during the review period and is projected to grow at a CAGR of 8.2% over the forecast period.
However, the industry could not escape the repercussions of the global economic crisis of 2009 which caused a significant slowdown in economic growth and the insurance industry.
Investment earnings of insurance companies received a major setback as interest rates declined as a consequence of the Government of Jamaica Debt Exchange Program (JDX) in 2010.
The Jamaican insurance industry is dominated by the non-life segment. Non-life was recorded as the largest insurance segment during the review period while personal accident and health insurance was the fastest-growing. Both segments are expected to continue following this trend over the forecast period.
Insurance premiums to rise
Insurance in Jamaica is expected to become more expensive as companies plan to increase premiums in 2012“2013. The move is likely to have an adverse effect on sales. Premiums are expected to increase across all insurance segments.
The increase in prices is driven by a move by insurers to offset decreased investment earnings and increased reinsurance costs.
The increase in premium is likely to be high in the motor and property categories (both residential and commercial) in particular, and is expected to be significant in third-party motor liability insurance. However, policies with no saving components are likely to be unaffected.
Insurers' investment income received a major setback as interest rates declined significantly as a result of the JDX which took place in early 2010.
High life expectancy spurs demand for health insurance
High life expectancy in Jamaica propelled the demand for health insurance products during the review period and this trend is likely to continue over the forecast period. Life expectancy increased from 72 years in 2007 to 75.6 years in 2011.
This drove the health insurance category which recorded double digit growth throughout the review period and is projected to grow at a CAGR of 11.9% over the forecast period.
Presence of public pension system restricts growth of private pension market
The presence of a public pension system in Jamaica significantly restricted the scope of the pension market.
Of the total current private sector workforce, 82% rely on state-run National Insurance Scheme (NIS) pension benefits to live off in retirement. All public sector employees can avail NIS pension benefits.
In Jamaica, 500,000 people are employed in the private sector, 400,000 people are self-employed and 140,000 are government-employed.
Insurers are expected to target the private workforce and the self-employed as these target groups avail less benefits through the NIS.
NIS currently grants retirees a maximum weekly sum of US2,400 for private employees.
This amount is inadequate to cover the living expenses of retirees, particularly those with higher medical expenses.
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