The current state of Cuba's insurance market and what commercial opportunities may unfold in the future, are outlined in the white paper "Reopening for Business: What Renewed Ties between the U.S. and Cuba Mean for Property/Casualty Insurers," co-written by Robert Hartwig, an economist and president of the New York City-based Insurance Information Institute, and Lynne McChristian, a teaching faculty member at Florida State University in Tallahassee.

Here are a few of the factors to consider for U.S. insurers contemplating a move into Cuba:

A pedestrian wades through a flooded portion of Avenida de los Presidentes, in Havana, Cuba, Saturday, Jan. 23, 2016. (Photo: Desmond Boylan/AP Photo)

Natural catastrophe risk

The infrastructure in Cuba will need financial protection from the myriad of natural disasters the country faces — including drought, hurricanes, landslides, storm surge and earthquakes. Cuba's greatest natural threats are wind (generally hurricanes) and storm surge. Since 2001, Cuba has been struck by 16 hurricanes and tropical storms.

Over a 20-year period Cuba, on average, will have one wind event (a hurricane) with losses above $997 million, according to the Probable Maximum Loss (PML) risk metric. The PML is used to establish the magnitude of resources that insurance companies or a government should have available to buffer losses.

Related: 8 ways to mitigate flooding risks

A challenge for the P&C insurance industry will be the lack of historical information related to catastrophe risk coming directly from Cuban officials upon which to base future insurance pricing. Fiscal details coming out of Cuba are generally incomplete, inaccurate and questionable. However, the international insurance market has proven to be adept at appropriately pricing risk in new and uncertain locations around the globe, a skill that will come into play when evaluating risk in Cuba.

A poster features portraits of Cuba's President Raul Castro, left, and President Obama and reads in Spanish "Welcome to Cuba" outside a restaurant in Havana, Cuba, Thursday, March 17. (Photo: Ramon Espinosa/AP Photo)

Business, political and economic risk

The Cuban government's control of business and the weak regulatory environment make the nation one of the world's most difficult places in which to do business. As of December 2015, there were only six totally foreign capital companies in Cuba: three in oil and energy, two in maritime transport and one in financial activities.

Related: Looking to expand in another country? Check the political risk first

Aon Crisis Risk Rating puts Cuba at high risk for political interference. Even with Cuba's recent reforms, political violence risk is expected to increase.

Among the many obstacles to doing business in Cuba is the existence of two official currencies. Until Cuba fully adopts a single currency strategy, it will be very difficult for foreign investments of any type to flow in.

The U.S. flag flies outside the U.S. embassy near many Cuban flags hoisted on Revolution Day, in Havana, Cuba, Friday, Jan. 1. (Photo: Desmond Boylan/AP Photo)

Cuba's current insurance market

It's an understatement to call Cuba's current insurance marketplace underdeveloped. Particularly for property and casualty insurers, the market is in its infancy. Cuba's entire insurance market is about as big as Alaska's personal auto market.

Two insurance companies are currently operating in Cuba, organized under the banner of the Caudal Group, which is owned and operated by the state.

Cuba's Ministry of Finance governs all insurance activity and is responsible for the activities of insurers and reinsurers, brokers, agents and other insurance intermediaries.

Cars drive along Neptuno Street as it rains in Havana, Cuba on Dec. 4, 2015.  (Photo: Desmond Boylan/AP Photo)

Autos

The Cuban government controls vehicle ownership, and a foreign individual or corporation must get approval to own one. Only two vehicles can be purchased for each foreign worker living on the island. Cuban workers are restricted to one vehicle. These restrictions apply to all vehicles, including imported cars, which are rare because of the embargo, and a 100% import tariff.

Related: For Auto insurers, the rate is there but where's the profit?

Third-party automobile liability is compulsory for foreign residents (including diplomats) and for vehicles carrying either freight or people.

There are several rental car agencies in Cuba, and Cubans may drive rental cars, with coverage extended on their own insurance for an additional cost. Such coverage may also extend to a second foreign driver. Insurance for rental cars must be paid in cash and generally does not cover liability.