Jan 2005 Financial News

Insurance to rise up to 20%

Jan 04, 2005

INSURANCE rates in Trinidad and the rest of the English-speaking Caribbean are set for a hefty increase for claims arising out of natural disasters. This comes less than just three months after Hurricane Ivan devastated a number of islands.
Bracing for claims arising out of an estimated US$5.7 billion in damages from Ivan, coupled with claims from other disasters such as earthquakes, flooding and fires in the Caribbean this year, companies have decided to increase the cost of annual premiums by 15 to 20 per cent, Gregory Hadeed, Vice President of the Association of Trinidad and Tobago Insurance companies told .

So far they are reported to have received liability claims for an estimated US$3 billion in damages. This figure includes about 15 per cent for damage by fire. Central Statistical Office figures show that losses by fire amounted to $36 million in 2001 (the last year for which official figures are available), while total income from non-life insurance was $485 million.

The increase in premium is not expected to affect all the insured, Hadeed said.

He noted: “Insurance companies have agreed that they will examine each case individually to determine the extent of any possible future liability.”

Allan Cabaral, a senior executive of Sagicor, said his company already had invited policy holders to come in to discuss the renewal of their policies. “We will review all policies and those that are below what is regarded as a fair rate will have to be adjusted,” he said.

Gregory Aboud, businessman and homeowner, described the proposed increase as understandable. But added: “Hopefully it will be temporary and could be removed later on.”

Aboud said such an increase might not be passed on by owners of business properties to their tenants because there are other creative ways of dealing with such a situation.

“There is a concept in the minds of people that all increases will be passed on to the consumers but there are other ways to do business.”

As for homeowners who have to bear the cost of the increases, Aboud said “homeowners would be challenged and they should consider getting together to purchase group insurance at the best rate.”

He noted: “Although Trinidad was spared direct hits from the four hurricanes that battered the Caribbean region, Tobago suffered damages from Hurricane Ivan – a reminder that our twin island state continues to have a significant wind exposure.”

Source: Nation Barbados & Trinidad Express