Business
The Business of Insurance
ICBL Managing Director Ingrid Innes outlines the Company’s visionary plans and some challenges within the Industry... What are the major challenges facing the Insurance Industry in the Caribbean these days? There are three issues impacting the industry:
Ingrid Innes Managing Director ICBL
a) The first is the shrinking and struggling economies that have caused an overall downturn in absolute amounts of insurance needed and purchased. As volumes decrease, some competing insurers have dropped prices in order to attempt to retain their volumes through increased market share. This in turn leads to less profitable business which impacts companies’ income and ultimately their balance sheets. The silver lining here is that for a short while, consumers will be paying less. b) Lack of suitable investment opportunities. Insurance companies by their nature keep substantial reserves on hand to pay future claims. The amount of these reserves are mandated by regulators and are developed annually by actuaries. These reserves need to be invested in a prudent and effective manner. As the economies have slowed and global interest rates have plummeted companies are hard pressed to find appropriate
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investments and this would have caused a reduction in investment income. Investment Income is an important factor contributing to the overall income of an insurance company and this puts pressure on pricing and is forcing insurance companies to greatly improve operational efficiency by becoming more automated.. Once again there is a silver lining as these new efficiencies are driving customer-centric initiatives that will deliver both better outcomes for our clients and provide long term productivity gains for insurers. c) Another issue facing our industry is the high number of Insurance Companies operating in Barbados in the general insurance sector relative to the size of population. Competition is great but some of the smaller companies may not be able to achieve the scale for efficient operations and because of this the industry may be ripe for consolidation. Consolidation usually results in improved scale of operations which can lead to further productivity gains which ultimately have a positive impact on companies and more importantly, the end consumer. The whole culture of insurance is one where the customer often feels they are