MADAME ESTATE--Homeowners in St. Maarten can expect to get some relief on their insurance premiums if insurance companies in St. Maarten pass on the savings they have received from reinsurers.
Seasoned insurance broker Neil Henderson from Henderson Insurances told reporters on Tuesday that the reduction in premiums can be applied immediately based on the last treaties signed in July. "It's happening already, you just need to find a broker that is going to negotiate for you. Of course it will not be handed to you, but the market is already dictating that the reductions must go in place and if one insurance company does not give the reduction then people have the option of going to another source," Henderson said.
Henderson said since the 2009 "meltdown," investors began looking for alternative lucrative avenues as traditional avenues such as savings, the stock market, mutual funds and government bonds were "not yielding sufficient profit."
"So now they are turning to the business of risk; they are investing in risk because risk is so all over the world and the people who are in the risks business are primarily the re-insurance industry," he explained. "If the New York Stock exchange were to allocate one per cent of its turnover, let's say on an annual basis, to reinsurance then you are looking at hundreds of billions that would be in the reinsurance industry; what that does is that it creates excessive cash flow in that industry and with excessive cash flow that would automatically lead to inflation and once you have inflation it means the prices have to go down because if you maintain your high prices then you will not be able to sell," He said. "Re-insurance companies sell capacity to local insurance companies so with them having inflation and prices going down they will have to sell cheaper to the insurance companies. We know the insurance companies in St. Maarten will have no choice but to pass on those reductions to the end user. If one insurance company decides to play hardball and do not pass on these savings, there are other insurance companies that will do it," he said.
Savings can already be passed on based on the last treaties that were signed a month ago. He estimated that homeowners' insurance premiums can go down by about ten per cent. "The added value is of course by going to an independent broker who represents more than one insurance company. Then we put the insurance companies to compete for your business and at Henderson Insurances we dare say that we believe that this reduction can be sustained easily for the coming three years based on market indications."
