A senior insurance official is calling on Government to provide an ease to the industry so they can significantly boost investments and expand opportunities in Barbados and beyond.
Edward Clarke, Executive Vice President and General Manager of Sagicor Life Inc.’s Barbados operations suggested financial institutions are currently very limited.
Speaking during the Central Bank’s panel discussion on the 2018 Financial Stability Report, Clarke reported that both general and life insurance companies have been struggling over the last few years to accumulate profits and have started lowering their rates to attract larger portions of the local market.
“We have seen years of constant contraction and you had to deal with things a lot differently than in the past,” said Clarke, while pleading for opportunities to “spread the risk on the investment side”.
Currently, regulations allow equity, real estate, mortgages and investment grade bonds to be registered in their investment fund. However, the downgrade of Barbados’ Government bonds below investment grade has even further restricted investment opportunities along with foreign exchange limitations due to its scarcity.
“In the past most companies, banks, insurance companies and financial institutions were allowed to invest in foreign investments, albeit a small percentage. That dried up for a number of years and we are hoping that would reopen since things seem to be on the way up, it is essential that we spread our risks and investment portfolio,” said Clarke, while pleading for a change in the current regulation of statutory funds.
“The way that there are currently structured is very risk averse and you are basically forced into buying government paper and instruments in Barbados. They have dried up as we all know and so the industry long-term has got to find alternative channels for investment including developmental projects and long-term infrastructure type projects.”
According to Clarke, insurance companies had already started to explore new development opportunities with the Financial Services Commission to find a compromise that would facilitate local investment in new projects, which he believes would bring future growth to Barbadians.
“The funds that we have, we need a channel to invest these funds in, because there’s no more Government paper. That was the easy way and that was the way used to force us into investing in Goverment paper, but now that that is not there we need to work with our client base and find alternative channels to invest our funds,” said Clarke.
In a brief interview with Barbados TODAY after the panel discussion, Clarke explained his appeal extended beyond overseas projects, noting that insurance companies should also be allowed to invest in long-term local projects.
“Whether that is a medical complex or a retirement home or renewable energy projects and things for the development of Barbados long-term, that will provide a viable return for the policyholders as well,” said Clarke.