Senior insurance industry officials are calling on authorities to do more to encourage residents to fully insure their properties, even if it means doing so by way of regulation.
At the same time, one General Insurance Association of Barbados member is suggesting that property insurance costs are lower than they were two decades ago and therefore there was no excuse for residents not to fully insure their homes.
These were some of the points put forward during the recent high-level insurance colloquium, which was attended by Prime Minister Mia Mottley, representatives from the International Monetary Fund, the Inter-American Development Bank and the Caribbean Development bank, diplomats, and other business officials, private sector and government representatives at the Lloyd Erskine Sandiford Centre.
While admitting that insurance costs were not the cheapest in the region, Chief Operating Officer and General Manager of Sagicor Life Inc. (Barbados) Edward Clarke expressed disappointment that the level of insurance remained very low.
He suggested that a public education drive and some form of incentive from governments could improve the insurance climate across the region.
“It is not cheap in many countries. The prices vary in all the countries, from Trinidad, one of the lowest, to Dominica as one of the highest, and the Bahamas is certainly now not at a low level. But we must encourage people to insure their properties and not be dependent on the government to do everything for them,” said Clarke.
“We need to do a lot more to educate the general public about the value of having that insurance policy. We continue to be reinsured by global insurance entities and I think it is something that will continue to be so, but if you do not have a wider base, our profile will always be where it is,” he said, pointing out that property insurance in the region was averaging around 20 per cent.
The senior insurance official explained that with the kinds of risks the region faced each year due to hurricanes, insurance industry operators have been doing what they could to encourage a greater take up of property insurance.
Pointing out that everyone operating a motor vehicle had to have at least third party insurance liability, Clarke questioned why it was not a requirement for individuals to have property and health insurance.
“Then the burden is put back on the country when there is a disaster or there is a health issue,” said Clarke.
Insisting that there was need for governments to encourage insurance take up, Clarke said: “Does it have to then be something that is regulated where through a property tax mechanism or a social levy mechanism we encourage people to insure themselves and to help them manage their own risk?”
“These are things we are going to need to look at because just doing it from a private enterprise point of view has not been very successful so far,” he said.
Clarke, who is also the head of the Barbados Private Sector Association, said generally there were some wealthy people and those who knew better in the region who refused to get full property insurance coverage.
“That goes for Barbados, it goes for the Cayman Islands and it goes for the Bahamas, people that are well educated, wealthy people as well that don’t think they need to insure their houses. So if that sort of culture is there how do we get the people that need it to understand the value of insurance?” he said.
He said there was no guarantee that the insurance premium costs would be lower if more people fully insured their properties since the reinsurance cost was driven by loss ratio and the region was prone to hurricanes, which was considered high-risk.
“What it does is give a wider base so the loss ratio could be different. It is all driven by loss ratio across the globe. That is how the rates are driven at this time but the wider based across the region is something that could have a positive effect,” Clarke explained.
General Manager of Co-operators General Insurance Company Anton Lovell echoed the call for greater education on insurance matters from the level of government, insisting that “persons in authority need to encourage persons to insure”.
He explained that all property insurance policies in Barbados offered building and replacement value but people were opting not to go for the full value because they don’t treat insurance as anything seriously or they don’t prioritize.
“A single policy in Barbados covers for hurricanes, earthquake, flood, fire. Twenty years ago the premiums were three times higher than what the premiums are today. So the excuse that premiums are too high we don’t share that view,” he insisted.
“Uninsurance and underinsurance are a matter of choice. Insurance is easily accessible in Barbados and I would say in the Caribbean. We need persons in authority to encourage people to [insure their properties],” said Lovell. [email protected]