Chartis and Progressive offer wind-free home insurance coverage
Published:Sunday | November 3, 2013 | 12:00 AM
Avia Collinder, Business Reporter
Chartis Jamaica Insurance Company Limited has partnered with Progressive Insurance Brokers Limited to introduce a new home insurance product to the market which the partners say could reduce the cost of property coverage by 50 per cent or more.
Progressive will market the product known as the Home Owners Fire and Minor Perils policy that was designed by and will be underwritten by Chartis.
Chartis began operating in Jamaica last year when the business of American Home Assurance Company was transferred to it. Both Chartis and American Home are subsidiaries of American International Group.
The policy, which is recommended for homes with solid roofing, secures against major perils such as fire, lightning, bush fires caused by spontaneous combustion, volcanic eruption, subterranean fire, explosion, earthquake, hail, flood, riot, strike, civil commotion, malicious damage, aircraft damage, impact damage, bursting of pipes and the overflow of water tanks, burglary, and theft.
But it does not cover wind-related events such as hurricane, windstorm, storm tempest, cyclone or tornado, nor does it cover any flooding that results from those events.
"The impact of the savings on the premium without the wind and associated perils is significant. The cost will be extremely reduced," said Progressive's CEO Gabriel Alexander.
Citing an example, Alexander said a home in Hope Pastures constructed of reinforced concrete and slab roofing, with a value of approximately J$15 million, may attract premiums of J$55,500, excluding taxes, under the Chartis/Progressive product.
However, a house in a similar location and value, but with a 'soft' roof, would cost the property owner about J$130,000 to insure he said.
Confident of growth
Alexander declined to reveal the size of Progressive's home owners portfolio, but said: "We are confident of at least a 50 per cent growth in the number of homes insured."
The residential property market in 2012 was valued at J$3.65 billion, according to Insurance Association of Jamaica data.
Questioned about the prudence of excluding wind damage in a country prone to hurricanes and tropical storms, he explained: "It is not that we believe in removing the wind peril from all home structures. Some houses will be in need of this protection, depending on the construction of the house, the roof and the direct exposure to wind as a peril."
Alexander said the probability of wind damage for a home of solid construction and a solid roof "is very remote", and that the damage was unlikely to fall outside the policy excess, that is, the portion of a claim that the insured is expected to pay out of pocket.
The policy excess is usually about two per cent of the sum insured.
"So, using the same Hope Pastures house with a value of J$15 million and maybe zinc roofing, what's the likelihood of damage costing more than J$300,000? If the repair cost is less, then your claim cannot be entertained as it is below the cost of the policy excess. This is how the risk could be calculated," said Alexander.
He added that where there is a reasonable to high probability of wind peril, the insured should maintain coverage.
"We will only make such a recommendation once the wind is of no threat to the client," he said of the wind-free policy.
The brokerage head said the policy is being offered for property owners in all areas of Jamaica.