The Bahamas has one of the worst records for hurricanes in the Caribbean. Natural disasters in the Bahamas increased during 2011 and 2012, with projections of 50% more active storms in 2013 than normal. Phil Kloszbach from Colorado State University predicts an above average 2013 Atlantic hurricane season, which falls between 1st of June and 30th of November. During this time 18 named storms are expected, nine of which will be hurricanes, and four, major hurricanes.
According to Timetric’s foresight report, this high-risk location will challenge the country’s insurance industry towards 2017. Especially the non-life insurance industry will take a hit. As a consequence, more premium funds will be ceded to international reinsurers to cover the increased risk. The islands’ main non-life insurers cede on average 42% of their gross written premium to reinsurers, due to the threat to property and life.
Today the Bahamas is ranked fourth amongst the leading offshore financial centers in the world. According to the IMF, the Bahamian financial sector accounted for 12% of total foreign bank assets held at global offshore financial centers at the end of March 2012. The economy is largely dependent on tourism and financial services. The country’s real GDP entered into recession during 2009, due to the global financial crisis and close ties with the US. According to the Timetric report, the uncertain global economic condition, frequent storms and slow recovery in the US are likely to act as a hindrance for national economic expansion towards 2017. However, the outlook for the insurance industry is generally positive. The regulatory framework, government investment and competitive markets will all contribute to an increase in employment and GDP. Revenues from written premiums have recovered from the financial crisis and are growing.