• Underdeveloped non-life market comprising just two state-owned companies
• Impact of 2014 Foreign Investment Law No 118 2014 yet to be seen
• US-Cuban relations greatly improved but significant obstacles remain
The report highlights a number of issues which may hamper prospects for insurers wanting to take advantage of improved political and economic ties with the US:
• The Cuban non-life insurance market is traditional and underdeveloped, comprising of just two state-owned companies offering a range of relatively basic products.
• There is little understanding of insurance in Cuban society as the state makes provision for all aspects of life and few segments of the population have disposable income.
• The stated intention of the government is to promote insurance - some action is being seen on this in the agriculture sector, but is unlikely to produce results until the population is more able to pay for it.
Tim Yeates, Managing Director at Axco commented:
“With little or no insurance culture and a difficult business environment, the opportunities for insurers in Cuba are limited. Political and economic changes have so far done little more than allow a few individuals to operate as self-employed; no significant new businesses have been created and, despite the government's declared intention to promote insurance, an increased demand is yet to been seen.
“The passing of the Foreign Investment Law and a thaw in relations with the United States suggest that, with time, the Cuban market will eventually open up. However, it does not look like this will happen in the short-medium term.”
The 2014 Foreign Investment Law No 118 was intended to stimulate direct foreign investment in Cuba in all sectors except for health, education, the military and communications media. The impact is yet to be seen but foreign companies operating in Cuba must insure all their property and casualty risks, giving first option to Cuban insurers as long as they offer terms and conditions competitive with international markets.
Cuba has been the subject of an embargo by the United States since 1961 which has stunted economic growth. Restrictions were eased in 2009 and in December 2014, it was announced that full diplomatic relations would be restored, followed by the liberalisation of trade, travel and remittances.
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