U.S. insurers look to Cuba as diplomatic relationship thaws: report

Currently, two insurance companies operate in Cuba, and both are owned by the state

The thaw in Cuba/U.S. relations will open opportunities for P&C insurers, but they won’t be without challenges, a report from the Insurance Information Institute suggests.

“Cuba’s current economic and political situation may not create an ideal business environment for insurers today,” says I.I.I. Robert Hartwig. “But given Cuba’s risk profile… the country needs the type of financial protection from natural disasters and other risks that insurers can provide.”

Cuba faces hurricane, storm surge and earthquake threats, and the government usually covers resulting property losses. But, Hartwig added, the state has limited abilities to rebuild after significant catastrophes.

Currently, two insurance companies operate in Cuba, and both are owned by the state. Empresa de Seguros Nacionales (ESEN) writes auto, liability and travel insurance, and draws 70 of its premiums from agricultural risk. Seguros Internacionales de Cuba, S.A. (ESICUBA) covers commercial and foreign-owned risks.

“The challenge for U.S. insurers will be to dissuade Cubans from the idea that the Cuban government owns and insures almost everything,” Lynne McChristianson, the I.I.I.’s Florida representative, said.

“Cuba’s 11 million citizens have had little need to buy auto or property insurance,” she added, noting the state controls vehicle ownership and the real estate market.

Nevertheless, Hartwig points out, many American insurers are looking to expand overseas, especially in emerging markets.

“As Cuba’s economy potentially opens itself to private investments from around the world, insurers and reinsurers will carefully monitor developments and seek opportunities as economic, political and regulatory considerations allow.”



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