BMI's Executive Summary

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The five countries profiled in this report are quite different from each other, as the table below suggests. Jamaica and the Dominican Republic are similar to lower-income countries in other parts of the world that have a history of economic, financial and political instability. The entire insurance sector is underdeveloped, and (especially in the Dominican Republic) people are reluctant or unable to save for the future through life insurance. At the other extreme, Barbados has already developed as a substantial centre for offshore captive insurance, although life insurance is not especially popular. Barbados may face competition from The Bahamas, which is already one of the world's most important offshore banking, private banking and trust centres (with over US$350bn in banking assets at the end of 2006) and where the authorities are keen to promote offshore insurance. Finally, Trinidad & Tobago is something of an anomaly. With a booming energy sector, the country is home to the largest economy and (after Jamaica) the largest population in the British West Indies. Life insurance density (i.e. premiums per capita) is high; however, non-life penetration (i.e. premiums as a percentage of GDP) is low.

Nevertheless, together, these five countries provide insights about the insurance sector of the Caribbean. There is much that is encouraging. Relative to medium-income developing countries in other parts of the world, it is clear that the general standards of regulation are high and, with some qualifications, the levels of country-specific risk low. Leading multi-national insurers have, for the most part, regarded the Caribbean as a region that they can afford to ignore. However, three groups – Guardian Holdings, CLICO/Colfire and Sagicor have filled the gap by building businesses across the region. The entire region has certain other advantages: proximity to and/or currency linkages with the US; typically lower costs for business than the US; the ability to speak the languages that matter for the US (i.e. English and Spanish). Against this, there are a number of obvious challenges. The first is that the aspects of the insurance sector which have the greatest potential – offshore life and offshore captive insurance – depend on the maintenance of double taxation treaties with the major economies (i.e. the US). Furthermore, this business depends on tolerance of and/or sympathy towards offshore centres on the part of the governments of the major economies. Worse, there are several centres outside the Caribbean – of which Bermuda is the nearest and most obvious example – which are already much longer established and much larger as offshore insurance centres. (Bermuda is, of course, not just a leader in captive insurance, but also offshore catastrophe reinsurance).

Another problem is that there are significant country-specific risks that have implications for the insurance sector. Trinidad & Tobago is overwhelmingly an energy economy. Barbados' and the Bahamas' currency pegs leaves them vulnerable to volatility in global financial markets. Political and security (i.e. crime) risks in Jamaica and the Dominican Republic are quite high. The entire region is prone to hurricanes – which increase claims against and/or the need for reinsurance by non-life insurers. Perhaps most importantly, it is quite often difficult to see where growth will come from. By definition, non-life insurance will grow rapidly if penetration is expanding. If life insurance is developing, density per capita will expand. However – except for offshore business in the Bahamas and Barbados – it is difficult to see how or why non-life penetration or life density should grow. In some cases (such as the non-life segment in Jamaica or the life segment in Trinidad & Tobago) this is because the relevant metric is already high. In other cases (such as the life segment in the Dominican Republic or, perhaps, the nonlife segment in Trinidad & Tobago) the relevant metric is quite (or very) low; there are obviously formidable challenges to be overcome.

Relative to most other countries and regions of the world, the Caribbean is an area where it is difficult to obtain hard data on the insurance sector from official sources (such as regulators or trade associations). We have much greater confidence about our data and estimates than we did at the end of 2006; however, except in relation to the Dominican Republic, we have still had to use more guesswork than in our reports that cover countries outside the region. We know, and in some cases can quantify aspects of the largest regional players. However, we are typically hard pressed to say what is the market share of company X in market Y.

The availability of such official information (which is plentiful in Bermuda, for instance, and in all of the smaller offshore financial services centres around the British Isles) will, in its own right, be something to monitor in coming years. Better information will indicate greater depth and sophistication of the

Contents of the Caribbean Insurance Report

The Sector At A Glance

Table: The Caribbean Markets At A Glance – Estimated Gross Written Premiums, 2007 (US$mn)

Key Insights Into The Insurance Sector Of The Caribbean

SWOT Analysis

Caribbean Insurance Industry SWOT

Key Features Of This Report

Projections And Forecasts

Table: Bahamas – Premiums, 2005-2012

Table Barbados – Premiums, 2005-2012

Table: Dominican Republic – Premiums, 2005-2012

Table: Jamaica – Premiums, 2005-2012

Table: Trinidad & Tobago – Premiums, 2005-2012

Projections And Drivers Of Growth

Data And Growth Drivers By Country

Bahamas

Table: Bahamas – Growth Drivers, 2005-2012

Barbados.

Table: Barbados – Growth Drivers, 2005-2012

Dominican Republic

Table Dominican Republic – Growth Drivers, 2005-2012

Jamaica

Table: Jamaica – Growth Drivers, 2005-2012

Trinidad & Tobago

Table: Trinidad & Tobago – Growth Drivers, 2005-2012

Country Outlooks

Bahamas

Barbados

Table: Barbados – Macroeconomic Data And Forecasts

Dominican Republic

Jamaica

Table: Jamaica – Economic Activity

Trinidad & Tobago

Table: Trinidad & Tobago – Economic Activity

Insurance Business Environment Ratings

Table: Bahamas – Insurance Business Environment Indicators

Table: Barbados – Insurance Business Environment Indicators

Table: Dominican Republic – Insurance Business Environment Indicators

Table: Jamaica – Insurance Business Environment Indicators

Table: Trinidad & Tobago – Insurance Business Environment Indicators

Table: Latin America And The Caribbean – Insurance Business Environment Rankings

Regional Context

Table: Non-Life Premiums In A Regional Context, 2007

Table: Life Premiums In A regional Context, 2007

Table: Comparison Of Major Lines As A % Of Non-Life Premiums, 2006

Analysis Of Competitive Conditions

Caribbean – Non-Life And Life Segments

Table: Estimated Gross Written Premiums, 2007 (US$mn)

Table: Presence Of Cross-Border Insurers – Non-Life

Table: Presence Of Cross-Border Insurers – Life

Methodology

Basis Of Projections

Insurance Business Environment Rating

Table: Insurance Business Environment Indicators And Rationale

Table: Weighting Of Indicators

Competitive Landscape for Latin America Insurance Reports: Sample       of Companies Ranked

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A cross-border overview of key players and their insurance market share across Latin America. Tables and graphs show country presence of multinationals across the region. Comparative company analyses and rankings by premium income (life and non-life). Company SWOTS for leading life and non-life insurers, covering network of offices, presence of foreign stakeholders, strategic relationships, joint ventures; portfolio of clients; diversity of product range; profit growth, investment strategy and risk exposure.

Network of Insurance Sources

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BMI's Latin American Insurance Reports are based on an extensive network of multilateral organisations, government departments, insurance industry associations, chambers of commerce and company reports. Information sources include:

Read about our other Insurance Reports