Jul 2008 Financial News

Life insurance may cost more

Jul 21, 2008

SAGICOR POLICY HOLDERS may pay more for new life insurance coverage come next year due to the 2008 Budget imposition of a one per cent increase in insurance premium tax.

The good news is the company is likely to absorb that cost in its general insurance line of business.

In a statement to BARBADOS BUSINESS AUTHORITY last Friday evening, Sagicor Life Inc. chief financial officer Anthony Chandler said: "The recent Budget proposal for an increase in premium tax will result in an additional tax burden to life insurance companies writing premiums in Barbados.

"The premium tax increase is likely to result in an increase in insurance premiums to the consumer for new policies sold after the tax comes into effect."

Prime Minister David Thompson has proposed an increase in insurance premium tax from January 1, 2009, that would raise $6.6 million for the year.

Insurance companies would also pay a $20 000 yearly licence fee, up from $5 000, but Sagicor General Insurance Inc. chief executive officer David Deane said that "increased premium tax and increased licensed fees might not be punitive in themselves. . . .

"I don't think that will cause companies to automatically say we will increase general insurance premiums."

"Life insurance policies sell long-term contracts; you contract for a premium which you expect to pay for a lifetime and the opportunity to change premiums does not really exist.

"You have the ability to price new contracts appropriately and they can reflect the additional taxes," he said.

Chandler emphasised that industry stakeholders needed full interpretation of legislation that would impose insurance-premium tax before they pass on any charges. (SR)


Source:
Nation News
Monday July 21, 2008

http://www.nationnews.com/story/297925204450555.php