Premiums grow, but insurance fraud remains
INSURERS saw their gross premium income rise by 10 per cent last year.
But the industry continued to be plagued by fraud and the sizeable number of motorists who don't insure their vehicles.
"The motor insurance industry has had to battle insurance fraud and an upsurge in personal injury claims, some of them seemingly quite dubious," said Hugh Reid, president of the Insurance Association of Jamaica (IAJ). "We are also faced with the problem of a number of vehicles on the road not being insured, which limits the ability to recover after accidents, as bogus insurance cover notes, car registration, driver's licences are out there."
Claims in general have increased by 12 per cent between 2007 and 2011, while those related to personal injury jumped by 52 per cent over the same period.
What's more, there are 300,000 cars that are insured compared to some 400,000 vehicles that operate on the road, by some estimates.
Preliminary estimates provided by the IAJ show that gross written premiums for general insurance companies increased from $27.8 billion in 2011 to $29.8 billion (of which $14 billion was for motor insurance) last year. This suggests that insurers might have missed out on collecting some $10 billion in premiums in 2012, by Caribbean Business Report estimates.
Early estimates placed gross premium written for the individual life side of the insurance business at $27.5 billion, or 12 per cent higher than in 2011.
Life insurers paid up $13.8 billion in benefits last year, representing a five per cent increase over 2011, while general insurers paid out $9.8 billion, of which $7.8 billion (up 10 per cent) was related to motor claims.
Given the importance of the motor insurance business, the IAJ established a customer helpline to deal with policy-holders' complaints in November 2011.
"Motor insurance claims have been the soft underbelly of the insurance industry, and they receive great visibility when they are not settled," said Reid. "We received 42 complaints in 2012, while data shows that for the 11 months period January to November, 27,082 claims were handled. The math speaks for itself, but we will never be content as long as we have one outstanding complaint."
Meanwhile, Reid said the IAJ is pleased to see a "comprehensive" Public Sector Reform Document. He said the insurance industry was very involved in its formulation through its many actuaries who worked through the Caribbean Actuarial Association.
"While it is still a work in progress, it will go a long way in providing for the retirement of public sector workers," Reid said.
"The industry continues to stay engaged in this process as we are collaborating with the public sector unions to help explain the provision of the reform to their members."
Still, he noted that the industry remains concerned that most Jamaicans have no proper arrangement for retirement, particularly for the self-employed and other "unattached persons", he said.
"We urge the Government to speed up the enactment of Pension Reform 2 to create a mechanism both for self-employed persons, persons who work with companies with no pension arrangements and persons who wish to invest further to enhance their existing pension plan," said Reid.