The Central Bank of Curaçao and St. Maarten (CBCS) plans to review the 60/40 per cent local versus international portfolio requirement for institutional investors like insurance firms (see related story). Solid local investment opportunities are scarce, prompting companies to deposit their excess cash on bank accounts. According to CBCS, “this drives interconnectedness between insurers and banks, which has been identified as a medium of risk transmission.”
Maintaining an adequate solvency position is undoubtedly critical to being able to comply with policy obligations and if that means investing a slightly bigger share abroad in the long-term interest of clients, so be it. At the same time, as the financial sector supervisor itself acknowledged, international markets are highly volatile and staying on the safe side is thus called for in that sense too.
CBCS is concerned about the rising number of under- or even uninsured properties in the monetary union and non-life premiums have been going up, as reinsurers increase prices due to higher losses from more frequent natural disasters. Coming less than a week ahead of what has been forecast as an active hurricane season, this is hardly good news.
During the passage of former tropical weather systems homeowners were even known to joke that theirs was “insured with God” as they simply could not afford the cost of enough storm coverage. Such thinking would obviously be ill-advised, because at least some insurance is always better than none.
