FSC Chairman: Insurance companies Urged to diversify during AGM 

Dana Malcolm 

Staff Writer 

#TurksandCaicos, September 15, 2023 – Climate emergencies on the other side of the globe will likely affect the pocketbooks of local Turks and Caicos Residents, according to Dr. David Oakden, Chairman of the Financial Services Commission (FSC), as he described the trickle-down effect of climate change on insurance.

“Climate change is much more than higher temperatures, it means we will have more severe hurricanes, more flooding, more wildfires– and many more extreme events,” he cautioned.

Oakden said that the common thread between these extreme weather events globally was that the funding for them ends up in the hands of global international re-insurers via reinsurance of domestic insurance companies, and the Turks and Caicos has a high dependence on these re-insurers.

“If you live in the Turks and Caicos and own property and you have property insurance, most of the premium you are paying is not going to the local insurance company— most of it is going off to the large global reinsurers.”

With extreme weather events now becoming more common because of climate change, those global companies will face higher losses and a more unpredictable market.

“These higher losses are going to result in higher premiums and I hate to say it but forest fires in Greece could well result in higher premiums for property in the Turks and Caicos islands.”

In addition, if insurance companies end up being unable to pay claims on damaged property, the banks holding the mortgages will also be affected, the Chairman explained.

But Oakden says there is a way that this risk can be mitigated.

“I think the local companies must take greater care in diversifying the number of reinsurers that they use so that the risk is spread around,” he stated.

He maintained that as the local regulator of the Financial Services Sector, which covers banking, insurance and more the FSC would have to take steps to encourage this behavior.

The AGM of the Turks and Caicos Financial Services Commission was held at the Shore Club on Friday August 25, 2023.