A.M. Best Co. has initiated country risk coverage for Jamaica and assigned it a country risk ranking of Tier III.
The result of A.M. Best’s country risk evaluation allows each country to be classified into one of five tiers, ranging from “Tier I” countries with stable environments and the least amount of risk, to “Tier V” countries that exhibit the most risk and offer the greatest challenges to insurers’ financial independence. The country risk assessment is then integrated into an insurer’s financial strength rating.
Jamaica’s Country Risk Tier Ranking is reportedly supported by its open foreign exchange policies, democratic electoral process, prudent government priorities, good relationships with stable governments, high foreign direct investment as a percent of GDP and a developed insurance industry.
Jamaica’s Country Risk Tier Ranking is limited by social instabilities, inefficient bureaucracy, low per capita income, high unemployment, high fiscal and trade deficits, foreign debt burden, and relative volatility in the equity market.
Country Risk is a significant factor for an insurance company operating in a high risk environment and might affect its financial strength rating. A.M. Best uses country risk analysis to determine how country-specific factors outside an insurer’s control might affect the insurer’s ability to meet ongoing financial obligations.
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