A controversial experiment to provide Caribbean Hotel Association (CHA) member properties with less volatile rates for catastrophe cover has failed.

Bermuda-based CHA Insurance Co. Ltd. (CHAIC) said yesterday it had thrown in the towel because Caribbean hotels in the CHA membership failed to support the venture.

Ironically, CHAIC was done in by the continued softness in market rates.

The firm was originally established because rates had been pushed to the roof by international insurers after devastating catastrophes.

A statement from the company announcing that it will cease underwriting said: "The decision to stop underwriting new or renewal business has brought to an end the Caribbean Hotel Association (property and casualty) insurance initiative launched two years ago in an attempt to stabilise the volatile Caribbean hotel industry premium rates.'' CHAIC chairman Peter Rackley said, "It is particularly disappointing to the founding shareholders that the CHA Insurance Co. has not been able to realise its vision of providing specialised insurance products to members of CHA at a premium offering long term pricing stability.

"This was due in the main to a lack of support on the part of the CHA member hotels who have by and large been able to obtain cheaper insurance from other companies operating in the Caribbean.'' He added: "The company is conscious of the effect this decision will have on CHA members who presently insure with CHA Insurance Company and will work closely with them to minimise any disruption in the transfer of coverage to a replacement insurance company.'' Executive vice president of the CHA, John Bell, commented, "It is with considerable regret we are advising our member hotels of this decision and a great sadness that CHA Insurance Company should now be obliged to cease underwriting business for lack of support on the part of the CHA members! "It is a major concern at this time that a vital long term opportunity for insurance stability has been lost to CHA member hotels.'' CHAIC has capital and surplus in excess of $15 million, which they said is more than sufficient to discharge fully all obligations to policyholders.