Reinsurance costs and capacity constraints for Caribbean insurers have begun to ease, driven by faster softening in property reinsurance pricing and some relaxation in terms and conditions, according to AM Best.
For regional insurers, this shift follows two years of aggressive rate adjustments that aligned pricing with higher reinsurance costs and inflation-driven repair expenses across property and motor lines.
Combined with a quiet 2025 hurricane season, the result has been a run of profitable outcomes.
According to Beinsure analysts, disciplined underwriting and recalibrated rate structures positioned insurers to capture margin once reinsurance markets stabilized.
Storm volatility remains the structural risk. Catastrophe cycles turn quickly. Growth targets and market share strategies require constant calibration.
In 2025, the Caribbean experienced fewer land-impacting storms compared with the prior year, with many systems remaining offshore.
Bridget Maehr, director at AM Best, said single-island insurers face concentration risk if they accumulate excessive property exposure within one territory.
Some carriers are pursuing geographic expansion to rebalance portfolios, particularly toward islands with lower catastrophe frequency.
Financial performance has strengthened over the past three years. Caribbean insurers reported favorable collective operating and net earnings, while most transitioned to IFRS 17 beginning in 2022.
The accounting shift contributed to a 12% increase in insurance service revenue to $2.7 bn and an 11.3% rise in net insurance service revenue to nearly $1.4 bn for AM Best-rated non-life carriers in 2024.
Expense pressure persists. Net operating and other costs continue to climb, limiting margin expansion despite improved underwriting conditions.
Externally, economic vulnerability remains pronounced. The region’s reliance on tourism and commodity exports ties performance to global demand cycles.
Ann Modica, director at AM Best, said external shocks and changing trade and immigration policies create downside risk through their effect on remittances, tourism flows, and commodity markets linked to the United States, Canada, and Europe.
While internal insurance metrics have improved, broader macro uncertainty continues to weigh on regional economic performance.
According to our data, Caribbean insurers now operate from a stronger technical base, yet remain structurally exposed to external economic swings beyond their control.
