AT?PRESENT, competition for business in the local general insurance industry is fierce and this redounds to the benefit of policyholders because premiums are now at their lowest – perhaps lower than in the 1990s – and this has been market-driven.
There are 14 general insurance companies writing business in Barbados. These companies compete not only on service delivery but also on price of the product. This too has worked to the benefit of policyholders because this competition has helped to drive down premium prices. As a result, insurance coverage has become far more affordable.
The General Insurance Association of Barbados (GIAB) has not been able to track the percentage of homes in the country that are insured. Howe ver, what we can say is that our casual observation suggests that the majority of cases, where houses have been recently destroyed by fire or affected by Tropical Storm Tomas, were uninsured.
This is an unfortunate and regrettable situation. Why? Insurance coverage offered in Barbados is extensive. Policies includes catastrophic perils such as hurricanes, floods, storms and earthquakes. They are all included in a single comprehensive policy.
In more developed countries this is not the case. Very often the state has to take on the responsibility of providing coverage for citizens. In some parts of Europe, homeowners cannot acquire flood coverage from commerical insurance companies, while in Los Angeles in the United States, homeowners cannot obtain earthquake cover from a general insurance company.
The point must be made that financial institutions in Barbados do not approve mortgages to borrowers unless they have secured insurance protection for the property and this applies to wood and concrete structures.
This is a general market requirement and so it begs the question: why is it that during the period of the mortgage homeowners will make sure that they have insurance coverage but after they have repaid the mortgage, it is recognised that some people do not continue to insure their homes?
It is even more critical for people to continue to insure their properties after they have repaid their mortgages because in the event of a loss, the homeowner has to bear the cost solely.
Every year, insurance companies spend thousands of dollars in advertising telling the public about the benefits of insurance coverage. That rotation of advertising increases dramatically during the hurricane season. The GIAB has even produced advertising in the electronic media to promote the benefits of insurance coverage.
The problem in Barbados is that people have become complacent because the island has not been seriously affected by a major disaster. In countries like Antigua, Cayman Islands and Grenada, people are more insurance-aware. You don’t have to remind them to purchase insurance coverage because they have experienced the destruction
caused by hurricanes. People in those countries insure their homes readily and pay higher premiums for coverage.
What more can be done? All the insurance companies offer payment plans. The rates are very competitive and the coverage is extensive. In addition most companies extend their policies and offer alternative accommodation in the event that your home becomes uninhabitable.
The decision is really up to Barbadians; insurance companies have played their part.
Anton Lovell is a director of the General Insurance Association of Barbados.
