History
The Bahamian general insurance market found its origin in a few isolated insurance agents formed mainly as a by-product of local merchants who through agency agreements wrote business for composite general insurers mainly domiciled in the U.K.
Slowly as the economy expanded and the demand for general insurance products grew merchants spun off their insurance business into stand alone agencies. The Road Traffic Act 1958 spurred this demand amongst the general population by the imposition of compulsory third party liability insurance for motorists.
The agency market grew steadily and in early 1972 the Bahamas General Insurance Association was formed. Originally the association consisted only of general insurance agents under the name of the Bahamas General Insurance Agents Association (BGIAA). In 1975, with the addition of underwriters and adjusters as members, the name was changed to the Bahamas General Insurance Association (BGIA). In February of 1993 the BGIA was incorporated under the Companies Act 1992, as a Company Limited by Guarantee.
The early 1980’s saw the emergence of the first general insurance company voluntarily formed and supported through its associated agency portfolio.
In the late 1980’s composite insurers that wrote business in the Caribbean and The Bahamas had a rude awakening to the reality of their property portfolios’ exposure to hurricanes after experiencing losses from Hurricane Hugo. The resultant retraction of capacity in the territory by insurers and their reinsurers saw some of the composite insurers withdraw from The Bahamas, thereby creating the opportunity for the establishment of other insurers in the local market.
The local companies wrote business primarily for their associated agents. However, in the 1990’s there began a divergence by a few local insurers to offer their products to other non-associated agents/brokers in the market.
In the late 1990’s and to-date we experienced the dilution of the foreign ownership of local insurers, and subsequent years saw the acquisition and mergers of agency portfolios of business by industry players to increase their market shares.
As you may gather the pattern of distribution of general insurance products throughout The Bahamas is predominantly through agents or brokers. The general insurance market today is not the languid industry it once was. It is now saturated by a number of insurers, agents and brokers all competing for market share with price, particularly in the property or fire class, being driven by reinsurers.
The industry faces internal pressures by further regulatory control and the increase in cost of doing business to be introduced by the revised domestic insurance act and the various compliance requirements brought on by a bevy of legislation from the financial services sector.
Externally, the industry faces further challenges as it looks ahead to the effects of the liberalization of trade through the regional initiatives of CSME and FTAA, and its need to look for local capital capacity to reduce its dependence on reinsurance and align itself with the other markets in the region to remain competitive in a broader market.
