Insurance Advice re Overseas Underwriter

[IANL]

Hi I am looking for some suggestions, thoughts advice on the risk on a policy that is underwritten an overseas underwriter. The broker Advised that the company Newpoint Reinsurance Company Limited is based offshore in the Carribean (Nevis)

Thanks

 

[Mark T Jones]

I expect @Frank the Insurance guy will have thoughts

i know it's not unusual for insurers to be based offshore, but not sure how you would verify them.

 

[Frank the Insurance guy]

Hi @IANL ,

It would be interesting to know what business/industry you are in?

With regards to Newport Reinsurance Company in particular, AM Best (Who assess an Insurer's financial strength) has recently withdrawn Credit Ratings for this company https://news.ambest.com/newscontent.aspx?refnum=264686 - This can sometimes indicate some potential financial instability/issues,

I would always caution against using overseas insurers. In my experience these are based in tax havens with lesser regulatory oversight than in the UK.

In particular, they would not be subject to the Insurance Act 2015 - which was put in place to protect policyholders!

Over the years many overseas insurers have come and gone - they generally spot a "gap in the market" where UK Insurance rates/premiums have increased considerably and come in at ridiculously low premiums. They tend to not be large companies and therefore need to protect their income - as such any large claims can be difficult to pursue as they may put barriers in your way to prevent any payment!

I suspect you have received a much cheaper quote from them, than by an insurer in the UK? You need to ask yourself why?

I know client's that have gone for cheap overseas insurers in the past - reason is mainly due to their financial position in that the UK premiums were not viable in the short term. Majority have been fine with little or no issues, if they get through the year without making a claim.

There have been instances in the past where an overseas insurer has gone into administration and immediately voided all policies, with no refund - leaving policyholders to find cover at short notice, with no prospect of getting any money back.

My advice:
1. Always use a UK Insurance company/underwriter if possible.
2. If you have to consider an overseas insurer due to their premiums being the only viable options - make sure you read their policy terms and conditions - do this line by line! You may find they have added a number of exclusions or conditions that you would not find in a UK policy!

 

[IANL]

Hi @IANL ,

It would be interesting to know what business/industry you are in?

With regards to Newport Reinsurance Company in particular, AM Best (Who assess an Insurer's financial strength) has recently withdrawn Credit Ratings for this company https://news.ambest.com/newscontent.aspx?refnum=264686 - This can sometimes indicate some potential financial instability/issues,

I would always caution against using overseas insurers. In my experience these are based in tax havens with lesser regulatory oversight than in the UK.

In particular, they would not be subject to the Insurance Act 2015 - which was put in place to protect policyholders!

Over the years many overseas insurers have come and gone - they generally spot a "gap in the market" where UK Insurance rates/premiums have increased considerably and come in at ridiculously low premiums. They tend to not be large companies and therefore need to protect their income - as such any large claims can be difficult to pursue as they may put barriers in your way to prevent any payment!

I suspect you have received a much cheaper quote from them, than by an insurer in the UK? You need to ask yourself why?

I know client's that have gone for cheap overseas insurers in the past - reason is mainly due to their financial position in that the UK premiums were not viable in the short term. Majority have been fine with little or no issues, if they get through the year without making a claim.

There have been instances in the past where an overseas insurer has gone into administration and immediately voided all policies, with no refund - leaving policyholders to find cover at short notice, with no prospect of getting any money back.

My advice:
1. Always use a UK Insurance company/underwriter if possible.
2. If you have to consider an overseas insurer due to their premiums being the only viable options - make sure you read their policy terms and conditions - do this line by line! You may find they have added a number of exclusions or conditions that you would not find in a UK policy!

Hi Thanks for the comprehensive reply. As much I thought. I did notice the withdrawal of the rating hence the post. I am also aware of a few overseas insurers failing in the past.

We do aerial photography so he policy we are looking at is for our own Light Aircraft Cover Yes we are talking a considerable saving. Which is for Hull, Engine damage but also passenger and third party liability of £ 4.2 Million.

 

[Sapiencecomms]

Hello,

Please see below for an official response from Newpoint Re. We are Sapience Communications, Newpoint Re's communications representative, and would be happy to answer any additional questions.

"We understand that choosing an insurance partner is an important decision that should be made with full transparency and confidence.

We are disappointed by AM Best’s approach to reviewing our parent’s asset structure, but Newpoint Re’s balance sheet strength has been assessed by AM Best as very strong, and it is fully independent operationally from our parent company.

We are working with other rating agencies with a more appropriate methodology to assess the asset structure of our parent, in support of Newpoint Re.

NPRE continues to operate with a strong capital position, a clear focus on long-term sustainability and remains fully compliant with all its regulatory requirements. Our operations are subject to robust oversight to ensure we can continue to deliver competitive, flexible coverage for our clients.”