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Unusually high rainfall leads to $1.6 mil. claims payout at Bahamas First

Bahamas First Holdings Limited’s Group President and Chief Executive Officer Patrick Ward revealed in the company’s second quarter financials that it paid out $1.6 million in claims as a result of the unusually high rainfall that occurred in The Bahamas in May and June.

Ward said said “unprecedented” rainfall and lightning activity caused damage to vehicles and other property, which led to 49 claims. He said these weather events are a “stark reminder” of the consequences of climate change.

“The first six months of the year were characterized by severe weather events across the globe, with unusual heatwaves, significant flooding and severe convective storms, accounting for the majority of the cumulative economic and insured losses that resulted from these various events,” said Ward.

“In The Bahamas, during the months of May and June, we experienced unprecedented levels of rainfall – over twelve inches for one event – in the north and western sections of New Providence and in parts of Grand Bahama to a lesser extent.

“We do not envisage that this figure ($1.6 million) will grow in the months to come, and the net impact, after reinsurance recoveries, is not expected to be material to our results.”

Ward also explained that Russia’s war in Ukraine and the resulting inflation have already caused the cost per claim across the group’s insurance portfolios to increase, especially in regards to motor claims.

“The cost per claim, compared to prior periods, is steadily creeping upward and we anticipate that the majority of this adverse impact will be confined to the motor portfolio in the absence of a major hurricane or catastrophic loss,” he said.

“In both jurisdictions in which we operate, we have active mitigation initiatives which have either already been deployed or are on standby for deployment as needed.

“We continue to see this both as a risk pricing and claims process issue, so our efforts are focused equally on these aspects.”

Ward added that the company’s operations have been benefiting from overall improvements in economic conditions in The Bahamas and the Cayman Islands.

He said the company recorded gross premiums of $94.4 million, compared $90 million in the same period last year.

“Coincident with the growth in business, net claims incurred increased during the second quarter in both the P&C [property and casualty] and health segments of our business when compared to the same period last year,” Ward said.

“Despite this fact, we were able to achieve net underwriting income of $14.1 million at the midyear point, which compares favorably to the prior year result of $13.9 million.”