An Industry that the Public love to hate!

What three (3) professions are most disliked by the general public – the taxman, the lawyer and the insurance man – and not necessarily in that order!!! There was a time some 30 years ago when the provision merchants who acted as commission agents for the British insurance companies were the main players in the insurance business in Trinidad and Tobago. Apart from a mere handful of indigenous companies at that time, the employment opportunities available in insurance were confined to clerical work- the filling out forms for transmission to the overseas principals. How times have changed…..

The policy direction of the government of the localization of banks and insurance companies in the 1970’s where ownership and control would be in the hands of nationals of Trinidad & Tobago caused the transformation of business into an industry requiring trained, experienced and qualified professionals. In fact the insurance industry now provides employment opportunities not only for persons trained and qualified in insurance but also persons with qualifications in other disciplines e.g. accountancy, actuarial science, marketing and in the humanities. It is an important sub-sector in the financial services industry responsible for assets protection and a key mobilizer of long-term savings.

The insurance industry has come a long way. However, it now faces new challenges as financial services are capable of crossing borders and both providers and consumers are now able to consummate transactions through non-traditional media – e.g. the internet.

While in some countries liberalization of the insurance business might mean the opening up of their markets to a higher level of foreign ownership which previously was reserved to local ownership, in Trinidad & Tobago effective liberalization occurred with the dismantling of the exchange control regime.

The giants of the North are pushing for market access without having to establish a local presence and can effectively compete with local providers. This will be the debate over the coming months and years and the local insurance companies will have to find a way to deal with these challenges since they will never have the financial muscle of these foreign competitors. In this new world order, it is entirely possible that our most successful insurance groups could disappear overnight into the fold of a foreign transnational. These are the present and future risks for the Trinidad and Tobago insurance industry.

What about the present? The insurance industry does not operate in a vacuum. Attitudes, infrastructural deficiencies, geographic local and exposure to natural perils all impact on the industry. The lack of proper firefighting facilities and often low water pressure affect the extinguishments of fires. Slow traffic and congested streets could turn in what otherwise would be a small fire into a conflagration.

The blatant “PH” trade where they have their own stand and the seemingly powerlessness of the Police to do anything about it will continue to affect the motor account. In addition, the public seems quite happy to travel in these vehicles. The general state of lawlessness on the nation’s roads and drunk driving are all contributing factors and laws and their enforcement are required to deal with the situation. Insurance companies have to fight back since they have a business to run.

They will investigate more thoroughly since there are those would act in collusion to defraud the insurance company. Everyone knows in a motor accident, the claim is usually inflated since there is one price for the public but another price for the insurance company!!! It is a case of Peter paying for Paul as genuine cases are treated with suspicion since everyone wants to profit from a claim. While there are obviously cases where some persons receive unfair treatment, most insurance companies tend to deal fairly with claimants and will settle claims as a business decision that they would otherwise deny merely to avoid the legal process, which is costly and time-consuming.

In taking measures to deal with the problems affecting their business, the insurance industry sometimes appear to be the villain and therefore seen in an unfavourable light. Can you do without the insurance industry? I doubt since it is the only known mechanism to treat with unexpected accident and losses. The public eventually ends up paying through increased premiums for the ills of society.

Prepared by Bernard K. Aquing – Chartered Insurer

Consultant to Association of Trinidad & Tobago Insurance Companies (ATTIC)