CINICO expansion a boost for Cayman

The Caymanian Times is pleased to bring you a new series in our new Monday edition focussing on the expansion of the Cayman Islands National Insurance Company, known by most people as CINICO. Over the coming months, CINICO is expanding the services it will be offering to include new insurance products. In this first article, CINICO discusses the reasoning behind its expansion and why the broadening of its offerings is important for the Cayman Islands as a whole.

The Cayman Islands National Insurance Company (CINICO) recently announced the commencement of its expansion outside of Health Insurance. Effective March 18, 2024, they began offering motor insurance and will offer home insurance in the not-too-distant future, on a limited scale.

There are several reasons for this expansion. The two main ones are set out below.

In the past, CINICO was regarded as the insurer of last resort. It is through CINICO that the Government administered a programme designed to provide coverage for those who were unable to or could not afford to get health insurance coverage elsewhere. This placed a very heavy burden on the Government and deviated from the underlying principle of insurance, the spreading of risk with a mixture of high and low risks in the portfolio, enabling an equitable spread of such risk.

To balance CINICO’s portfolio and offset the losses from the higher-risk elements with lower and more profitable risks, the Ministry of Finance and Economic Development sought to add a wider range of insurance products.

Against this background, CINICO initiated the expansion into motor and home insurance and will also be introducing new health insurance offerings in due course. 

The second main reason finds its genesis in the desire to ensure sustainability in the local insurance industry. The health insurance sector experienced some turmoil with the withdrawal of Generali from the Cayman market in 2021. This prompted the Ministry to seek to reaffirm the Government’s support for our insurance-seeking population by expanding CINICO’s operations. This was intended to provide our population with the confidence that there is a company that is here to stay, along with the other long-standing companies. CINICO is not seeking to compete with the private insurance companies. It is seeking to supplement the offerings available to our population with a view towards market stability and sustainability.

Developments in the international reinsurance sector have further highlighted this need. Regional insurance companies do not have enough capital to enable them to cover all of the properties and vehicles that require insurance. Accordingly, they must purchase reinsurance from the international reinsurance market. Within the past few years, we have seen a distinct reduction in reinsurers’ appetite for catastrophe-prone regions such as the Caribbean in general, and Cayman in particular.

The result of this is the current situation wherein most insurance companies cannot provide coverage for existing properties, and worse, for new properties. This is a threat not only to the individual property owners, but also to the financial sector which will be reluctant to extend financing in the absence of insurance protection, and also to the construction sector which cannot build without financing or a reasonable expectation of being able to sell the newly constructed properties.

This is a problem that exists to varying degrees across the Caribbean and a day may well come when regional governments may be called upon to intervene by committing significant amounts of capital in support of homeowners, financial institutions, and the construction sector.

It is with this in mind that CINICO is initiating a gradual entry into the home insurance arena. Like the other insurers, CINICO is faced with severe capacity restrictions but regards this as a first step towards being able to play a larger part in the sustainability of the property insurance sector in Cayman. This is a long-term objective, rather than a short-term one designed to provide lower premiums.

The issue now is not whether lower-cost insurance is available, but rather, whether insurance is available at any cost.