Premiums a burden for PSV sector

With some of them having to pay as much as $20 000 more in insurance premiums per year, privately-owned public sector vehicle (PSV) operators are calling for an urgent review of how insurance coverage is provided for the industry.

“Insurance costs for our vehicles are ridiculously high. I often ask the question, ‘how do the insurance companies go about rating us?’,” President of the Alliance Owners of Public Transport (AOPT) Roy Raphael told Barbados TODAY in a recent interview.

He argued that having to compete with several other players in the public transport sector, ZR and minibus drivers were struggling to meet the “high” premiums.

“You have a ZR paying as much as $20,000 a year. That is ridiculous. You have to look for $20,000 on the road with different players on the road now – the ZM, BT buses, minibuses, ZRs, the TAP (Transport Augmentation Programme) buses, and the Transport Board buses – everybody is now trying to get this mighty dollar that we are talking about,” he explained.

Moreover, said Raphael, there were several illegal operators that were also taking a bite out of the proverbial pie, making it even more difficult for them to earn enough to cover insurance.

“We know with the situation everybody has to eat and drink, but it is creating problems,” he added.

He said the insurance companies were charging them based on the number of claims they have to pay out per year.

“I understand that . . . but to charge a PSV $20,000 is ridiculous in my view. Imagine you are going to have to look for $20,000 you are going to create more issues on the road than ever,” he argued.

He insisted that the current situation was one of “Peter paying for Paul, and Paul paying for all”.

Instead, Raphael suggested that the remedy was for insurance companies to “up the insurance” only for those who “create problems on the road”.

“We have people right now on the roads of Barbados that create no problem. I spoke to a guy who has been driving for near 40 years and he does not get into any problems. Why should he pay $12,000 or $13,000 for insurance? I am calling on insurance companies to have a discussion with us soon,” said Raphael.

Barbados TODAY understands that some insurance companies that used to offer coverage for PSV operators have now opted out of doing so.

At one point there were about six of them providing coverage, but it has now dwindled to only three – the Insurance Corporation of Barbados Ltd (ICBL) with the biggest chunk of it, Consumers’ Guarantee Insurance (CGI) and BCIC.

PSV operators are required to have comprehensive insurance, providing coverage for all the allotted passengers and the vehicle.

However, Raphael complained that the “prohibitive cost” could force some of them especially now, not to get adequate coverage.

“If we are talking about bringing order to the sector, we must address everything to bring order to the sector, including insurance,” he said.

It is estimated that PSVs move roughly 80 per cent of passengers taking public transportation.

One ZR operator who has been in the industry for several years, agreed that insurance for the sector needed urgent overhauling.

“My insurance right now is $9,000. Right now earnings down. For the amount of time that we were off the roads, accidents down. Insurance premiums should be coming down and I am telling you they are not going to come down. I never have any accident but my insurance start at $9,000,” said the man, who would only give his name as Don.

“One of the things that needs overhauling for certain is insurance and not just insurance for PSVs, insurance in general needs a broad overhaul because there is no way that I am driving a vehicle that is insured, somebody hit the vehicle and they have an expired licence and write this off and I can’t get a cent.

“That is something that needs looking into in Barbados . . . If I am paying you my money to insure my vehicle, if I am wrong and you don’t want to fix my vehicle I can accept that, but if I am right, don’t tell me about the other person. If you have a problem sue them and get your money from them’,” he said.

Several calls to president of the General Insurance Association of Barbados (GIAB) Goulbourne Alleyne went unanswered.

However, several insurance industry experts told Barbados TODAY they remained very concerned about the claims firms had to pay out annually, adding that the cost of insurance premiums was warranted.

“The biggest challenge that we have is indiscipline among drivers. There are many people who own and drive minibuses and they have excellent claims records. It is the ones who are not owner-driven and they work for a commission, those are the ones who break the rules and give you a bad claims history,” said one seasoned insurance official.

Another industry expert explained that most insurance companies were staying away from insuring PSVs because of the high risk and the “horrendous” behaviour of some PSV operators.

“As a result, the premiums are, as they say, ‘high’ but are they ‘high’ and unwarranted? No, because if they were unwarranted everybody would be running to write one of them. They are ‘high’ and still companies don’t want to write them,” he said.

He further explained that under the Insurance Act, companies face a potential liability claim of up to $30 million for one PSV van.

“So every time you insure one of those vehicles you are insuring a potential liability of $30 million,” he told Barbados TODAY.

“So what relevance is the point about you never had an accident? You are not insuring what never happen before. You are insuring what may happen . . . You run off the road and injure two people, what is $12,000 in premium? So when you say ‘too high’, that is ‘too high’ from the perspective of somebody who doesn’t have to pay claims.

He further explained: “If they hit a car and damages it, that can easily be $15,000 in damage and you are not only covering passengers in the PSV but you are also covering passengers in the other vehicle that the PSV may hit. So there are two sets of liabilities and two sets of property damage.”

marlonmadden@barbadostoday.bb