Working Paper Series: Special Edition of 2016 to 2018 Interns

than 50 per cent of homes are not insured and there was an overall decline in the customer base over time. Therefore, this upward trend is mostly attributed to an increase in the premium rates.

Further increase in premiums may price the poor and vulnerable out of the market, resulting in a greater number of uninsured and/or underinsured persons and by extension, a low insurance penetration. Insurance spending, also known as insurance penetration measures the growth of insurance premiums vis-a-vis the growth of the gross domestic product in the economy, which reflects the level of development of the insurance sector in the region. It also represents the portion of a country’s GDP that is protected by premiums paid to the private sector. Although premium per capita exhibits an upward trend, penetration has remained at approximately zero percent. On average, the insurance penetration rate for four countries 54 in the ECCU for the period 2014-2017 is 0.0024 per cent, which is extremely low compared with the global average of 2.8 per cent (see Figure 5). Accordingly, this low penetration rate may be due to a lack of affordability of insurance among individuals, lack of awareness, negative perception of insurance companies and the uninsurable nature of some properties due to their location in hazard prone areas or its inability to meet building code criteria.

Figure 5: Insurance Penetration for Grenada, SVG, Dominica, SKN, ECCU and Global Average

Insurance Penetration

2.8%

0.0039% 0.0016% 0.0009% 0.0032% 0.0024%

Dominica Grenada

SKN SVG ECCU Average

Global Average

Source: Central Statistics Office, Eastern Caribbean Central Bank & Swiss Reinsurance

54 Dominica, Grenada, St. Vincent & the Grenadines and St. Kitts and Nevis

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