CINICO unveils new home insurance policy with first-in-market Parametric Coverage

The Cayman Islands National Insurance Company (CINICO), has announced that as of 9 August 2024, they will be offering home insurance policies featuring a first-in-market benefit, Parametric Insurance coverage, which pays out pre-agreed amounts automatically to cover incidental expenses, without the need to submit a claim in the event of a hurricane of a Category 3 or above, which passes within a specified distance from the Cayman Islands.

This means homeowners can receive a payment, typically within 14-21 days of the passage of a hurricane to help with expenses not normally covered by insurance, such as additional groceries, securing the premises, and cleanup expenses after the passage of the storm, whether the home is damaged or not.

CINICO’s new home insurance policy with Parametric Insurance coverage follows the launch of their new motor insurance product in March 2024. Both insurance offerings are the outcomes of CINICO’s broader expansion plan announced in 2022 aimed at ensuring that Cayman Islands’ homeowners and residents have access to sufficient insurance capacity and coverage in an increasingly vulnerable insurance market.

CINICO’s CEO, Michael Gayle explained, “We are thrilled to offer home insurance and include Parametric coverage as a standard feature for new policies. Outside of the Cayman Islands, Parametric Insurance cover is sometimes available to home insurance policy owners at an additional cost. However, this benefit will be included for the first time in Cayman as a standard feature of CINICO’s home insurance policies.”

New home insurance policy holders aren’t the only ones that benefit from CINICO’s Parametric coverage. It is also available as a separate stand-alone policy for homeowners with existing home insurance policies whether insured with CINICO or not, and can be used to offset the impact of policy deductibles.

Mr. Gayle is on the Board of the Caribbean Catastrophe Risk Insurance Facility (CCRIF SPC) which provides Parametric coverage to many Caribbean and Central American governments which will pay out more than US$80 million to countries affected by Hurricane Beryl, all within 14 days after the passing of the hurricane.

Mr. Gayle continued, “CINICO is raising the bar in the insurance industry, and fulfilling our promise to bring innovation to the insurance industry. Providing Cayman Islands’ homeowners with reliable and timely support, especially in the face of hurricanes, helps achieve that goal. By including Parametric Insurance coverage as a standard feature, CINICO ensures that homeowners have access to swift, reliable support when they need it most.”

He also noted that CINICO’s venture into homeowners insurance fulfils its mission as the government-owned insurance company to ensure a resilient insurance sector.

“Reinsurance restrictions have imposed limits on the number of policies that we can issue for the balance of this year, particularly in the face of a potentially active hurricane season,” Mr. Gayle explained. “We expect our Parametric product to be a successful addition to the insurance market and anticipate having to seek additional capacity in 2025 to meet the demand. Innovation is critical to the resilience of the insurance sector in Cayman and we will continue to look for more ways to improve products and benefits.”

Premier and Minister for Finance, Hon. Juliana O’Connor-Connolly, who holds responsibility for CINICO, welcomes this new advancement in the Cayman Islands insurance market.

Hon. Premier O’Connor-Connolly said, “A strong and stable insurance industry is vital for the resilience of our islands. The inclusion of parametric coverage as a standard feature in CINICO’s new home insurance policy, demonstrates a significant step forward in ensuring our residents are well-protected.”

CINICO members and new customers can find out more about the new motor and home insurance policies by visiting www.cinico.ky , calling 345-949-8101 or emailing property@cinico.ky .

Insurance has for the most part, been a homogeneous product. There has tended to be not much difference between the offerings from one insurance company and another. CINICO’s venture into Property Insurance aims to change that.

In the face of a potentially active hurricane season, CINICO will be introducing a Homeowners policy which provides all of the usual coverage, plus a little extra. When a hurricane is coming, homeowners incur additional expenses before and after the hurricane. There are costs associated with securing the premises, purchasing extra groceries and supplies and cleanup expenses after the storm. There may even be minor damage which is too small for an insurance claim or the need to purchase a generator if there is prolonged disruption of the electricity supply. None of these costs have been recoverable under normal circumstances. Until now.

CINICO is introducing Parametric Insurance coverage as an addition to our Homeowners policy. This addition to the coverage will provide a payment to help with these expenses, typically within 14 to 21 days of the passage of a hurricane, whether your home is damaged or not. For example, if your home is insured for $500,000 and a hurricane with sustained winds (as determined by the National Hurricane Centre in Miami) over 110 m.p.h. within a 45-mile radius of Grand Cayman or 30-mile radius of the Sister Islands (see map below), you would receive $1,000, whether you suffer damage or not. It is assumed that this $1,000 will help to offset your unexpected costs, but there are no restrictions on how you can spend it.

If the sustained wind speed is, say, 140 m.p.h., you would receive $2,500, and for sustained wind speeds of 160 m.p.h. or above, you would receive $5,000. These payments are not dependent on damage, but merely on the confirmation that the parameters (wind speed and proximity) have been met.

Property policies have a deductible which is typically 3% (or sometimes higher) and many instances of damage will fall below that figure. It is possible to buy additional parametric coverage to offset the impact of the deductible.

With the inclusion of Parametric coverage in our Homeowners policy, CINICO is raising the bar in the insurance industry, and fulfilling our promise to bring innovation to the insurance industry.

We are fortunate in that our CEO is one of a small handful of people in the Caribbean with hands-on experience with Parametric insurance, as he sits on the Board of the Caribbean Catastrophe Risk Insurance Facility (CCRIF SPC) which provides parametric coverage to many Caribbean and Central American governments and which will pay out more than US$80 million to countries affected by Hurricane Beryl, all within 14 days after the passing of the hurricane. Having this expertise in-house has enabled CINICO to make this coverage available to the individual homeowner in Cayman for the first time.

This venture into Homeowners insurance is the first small step for CINICO as reinsurance restrictions have imposed limits on the number of policies that we can issue for the balance of this year, particularly in the face of a potentially active hurricane season. We expect our Parametric product to be a successful addition to the insurance market and anticipate having to seek additional capacity in 2025 to meet the demand.

Grand Cayman (I):

Sister Islands (II):