Exclusive: Regulator links uninsured vehicle surge to affordability, not enforcement failure

Tens of thousands of Barbadians are driving uninsured vehicles, leaving victims of road accidents exposed to financial hardship — a crisis fuelled more by unaffordable premiums and weaknesses in the island’s insurance market than by lawlessness or regulatory neglect, the head of the Financial Services Commission has told Barbados TODAY exclusively.

Chief executive officer Warrick Ward made the connection in an interview against the backdrop of an escalating road safety and insurance crisis, with Barbados averaging about 15 traffic accidents each day and insurers warning that current loss levels are no longer sustainable.

Police data show that, of roughly 180 000 vehicles on the island, about 50 000 are uninsured or untaxed, meaning close to one in four vehicles may be operating outside the law. Senior insurance industry executives estimate that three out of every ten accidents involve either uninsured vehicles or unlicensed drivers, leaving innocent third parties to shoulder heavy financial losses.

Those figures come as insurers report ballooning losses driven by the sheer volume of collisions. Chief executive of Co‑operators General Insurance Company, Anton Lovell, warned that the industry can no longer absorb the scale of daily crashes, with his company alone averaging seven to eight accidents a day and an estimated 15 recorded island‑wide.

Lovell said the average repair bill per collision stood at about $10 000, with accidents involving injuries routinely doubling that figure, placing pressure on insurers, foreign exchange reserves due to imported parts, and the Queen Elizabeth Hospital as injury cases mount.

“But certainly, in my view, the premiums are extremely reasonable when you consider the number of accidents and the resulting cost of these accidents,” Lovell told Barbados TODAY in January.

Against that context, Ward said the regulator’s more fundamental concern was whether motor insurance had become unaffordable for ordinary Barbadians, pushing some drivers into the risky decision to go without cover.

“One of the key things, however, we would need to consider is whether or not the price or the premiums that are charged has taken it out of the reach of ordinary people in terms of being able to pay their insurance claims,” he said.

“That speaks of a broader problem with regards to reinsurance. It also speaks to the penetration rate with regards to insurance.”

The level of penetration in property and casualty insurance remained low, making the discussion on financial inclusion unavoidable.

Ward said: “We know by the penetration rate that we calculate in terms of property and casualty that it is very low. And so that’s why all this discussion about financial inclusion becomes pertinent. A vehicle is not cheap. And so for someone to go to the decision that they are not going to insure, that means that it is a very tough decision to calculate.”

Acknowledging the scale of the uninsured vehicle problem, Ward said the figures being discussed were significant.

“That number is significant considering the amount of vehicles that we are supposed to have,” he said.

But he cautioned that the FSC would be overreaching by dictating how insurers manage the issue at an operational level, pointing instead to the role of the industry and its representative bodies.

“The general insurance body, they might be able to give you more in terms of what they are doing on a micro level with the insurer. Because we know it is a problem. But we can’t overreach and try to impose things on the companies themselves,” Ward said.

He reiterated that while the issue was serious, the commission’s mandate remained focused on macro‑regulation rather than enforcement.

“Obviously, that would be a major problem to hear that there are that many uninsured vehicles. But we, of course, are interested more or less in the macro picture. So we are interested in how the insurance industry on its own is regulated, how their operations work,” Ward said.

“So when it comes to uninsured vehicles, it becomes another branch. It’s not really our mandate to police whether the vehicles are uninsured or not. Our major challenge then becomes with regards to complaint.”

From the regulator’s perspective, uninsured vehicles only become a direct concern if they place stress on the insurance system itself, through rising complaints, delayed settlements or insurers being unable to meet claims. Ward said those warning signs had not emerged.

“If you find that there is an increase in complaints as it relates to uninsured vehicles, slow processing of claims etc … but no, we have not seen a big increase in terms of complaints as it relates to slow processing of claims from uninsured vehicles. But really, that’s a police matter.”

Ward added that addressing the uninsured‑vehicle problem would require coordinated action across multiple fronts, including financial inclusion, product design, reinsurance reform and road safety initiatives.

“We pay a significant amount of reinsurance every year. That is not matched by our reality. But that’s another area region‑wide that we would need to look at.”

While acknowledging that vehicles and parts are imported and inevitably carry high costs, the FSC chief said the challenge was to strike a balance between commercial viability for insurers and affordability for the average citizen.

“So you would have to pay something, but you want to make it as cost‑effective as possible. But it’s a multifaceted challenge that we would have to face,” he said.