Arthur Lok Jack

Flashback December 2015: Arthur Lok Jack, chairman of the Guardian Holdings Ltd (GHL), centre, shake hands with Ravi Tewari, from left, CEO of GHL, Imtiaz Ahamad, major shareholder and director of GHL, National Commercial Bank Jamaica Ltd (NCBJ) chairman Michael Lee Chin and Patrick Hylton, managing director of NCBJ after the news conference announcing the acquisition of a major stake in Guardian Holdings Ltd by NCBJ. The news conference was held at Hyatt Regency in Port of Spain.

If you are paying more on your vehicle and property insurance premiums, here’s why.

Local insurance companies are being driven to increase their insurance premiums by their reinsurers, those large global companies that provide support to insurance companies in the event of a catastrophe, such as a hurricane or an earthquake.

In a full page newspaper advertisement published on January 6, 2021, the Association of Trinidad and Tobago Insurance Companies (ATTIC) said T&T insurance premiums are going up for global and local reasons.

The global reasons include low interest rates, more than three years of global catastrophe losses, increased court judgments and settlement as well as the uncertainty surrounding Covid-19.

“Contrary to these international trends, average property insurance premiums in Trinidad and Tobago have declined and are significantly lower than other Caribbean territories. This trend is no longer acceptable for well-known reinsurance supporters of our market,” according to the ATTIC statement, which added, “Exacerbating this situation is the long delays in reinsurers being paid because of constant challenges faced by local insurers in accessing foreign exchange to make reinsurance payments.

“The combined effect has been the reduction of support by some reinsurers and the ongoing threat by others to fully withdraw from the market.”

The pressure that global reinsurers are putting on regional insurers is significant.

Ravi Tewari is the group CEO of Guardian Holdings Ltd, the largest insurance company in the region. GHL’s general insurance subsidiary, Guardian General Insurance (GGI), is the largest provider of property and vehicle insurance in T&T.

In an interview on Monday, Tewari said: “If Guardian General were to pass on the rate increases instigated by our reinsurers, local insurance rates on property and vehicles would increase by between 20 and 30 per cent.”

That means the annual premium on a house or car that was $6,000 in 2020 could be as high as $7,800 in 2021.

The insurance executive, who is a Fellow of the Institute of Actuaries said based on the competitiveness of the local insurance market, GGI is taking a risk-based and variable approach to increasing insurance premiums.

“This means that insurance premiums for properties and vehicles that are considered to be low risk are likely to receive lower rate increases than higher-risked insureds.

GGI has already started to increase premium rates, as some people whose policies expired in January of February have already found out.

Liselle Siriram, a representative of Sterling Insurance Services Ltd, told Express Business last week that paying more money to renew an insurance policy may not be such a bad thing.

She said, “Rates are set by the Association of Trinidad and Tobago Insurance Companies (ATTIC). They have given brokers the guidelines as to how to negotiate rates.”

Regarding property insurance, rates have already increased, Siriram said.

Looking at Trinidad and Tobago not just as a country but a part of the Caribbean region, Siriram said, we would be considered one book of business.

Giving an example she said, “Let’s say St Maarten suffered losses, they would say Trinidad since you fall close to St Maarten, if something were to happen then you too can also be affected.”

And as such, Siriram says it is something they (ATTIC) would pay attention to regarding how low our insurance rates go.

“We don’t want a natural disaster to happen, and it affects everybody and the reinsurers don’t want to pay the claim. We really have to be conscious of keeping our rates within a reasonable range,” she said.

Giving a better insight how this would generally affect homeowners, Siriram said, “Homeowners may face an increase of one to two dollars of premium of every $1,000 depending on the value of the house.”

One of the biggest challenges Siriram says the company has had to face during the pandemic is the recent increase in rates.

She said, “We have had challenges with business being closed down as well as some challenges with clients not being able to pay right now, so we have to help them and work with them in terms of structuring the policy in a different way that they can afford it or work with the insurance companies with the client to get premium financing done, so they would pay over a period of time instead of one lump sum payment, which some clients prefer. We have been able to maintain our book of business and keep our clients happy, but it did not come without its struggles.”

Siriram says the company has been in operation for the past 30 years under director, Winston Seereram, and provides insurance brokerage and risk management services.

Apart from the upward adjustments being demanded by reinsurers, ATTIC also said the new Insurance Act, which was proclaimed on January 1, 2021 is also contributing to pricing pressure.

“The welcome new Act, while strengthening policyholders protection, further increases local insurance capital requirements and operating costs.”

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