Lt. Gov. Tregenza Roach assured Virgin Islands homeowners Wednesday that windstorm and other property insurance was still available but global pressures were limiting options and raising prices.
Rates on some policies have gone up five percent and many discounts were no longer offered, said Glendina P. Matthew, acting director of the Division of Banking, Insurance and Financial Regulation.
Even with the rate increases, some insurance companies have indicated that their reinsurance companies — large insurance companies that insure smaller insurance companies — have deemed the rate hikes insufficient and may be requesting more, Roach said.
Wildfires and floods on the mainland, as well as two 2017 Category 5 hurricanes in the USVI, have spooked these reinsurance companies.
“Like Florida and other Caribbean islands in hurricane-prone areas, the Virgin Islands is also feeling the pressures of the hard insurance market, particularly in the homeowners’ market. In addition to reduced insurance capacity, some reinsurance companies and direct insurers have pulled out of the insurance market in the territory, seeking higher profitability elsewhere,” Roach said in a written statement.
Roach called together local government and private industry experts to address the hard market, where premiums increase, coverage is limited, and coverage for most types of insurance decreases. Meeting with private groups — the Virgin Islands Insurance Association and admitted property and casualty insurance companies — Roach’s office confirmed which insurers were still writing policies and what rate increases they may need to continue doing so. They also discussed questions from homeowners about increased costs and limited availability.
The insurance companies that remain in the territory have been limited in the amount of coverage they can write, Roach said. Reinsurers have also required insurers to reduce the amount of wooden or mixed frame construction in their portfolios. The reinsurers have taken the position that wooden structures are more vulnerable to windstorms and so consider them high risk.
Although rate increases are difficult for many homeowners, they may not be permanent. As rates go up, lesser-known insurers and new companies may come in with competitive policies at lower rates, industry experts said earlier in July.
In the meantime, a lack of insurance policies available through traditional routes may drive those seeking coverage in the riskier surplus lines market, Roach warned.
“I encourage policyholders to ensure your policy is timely renewed because if it is not renewed you may have difficulty securing homeowners’ insurance due to limited capacity,” Roach said. “Virgin Islanders who are seeking to purchase homeowners’ insurance should contact an insurance producer to determine the availability of coverage with either insurers that are licensed in the territory or insurers who are not licensed but are able to provide coverage through their surplus lines products.”
