FSC official warns of spike in domestic insurance rates
A top official of the local financial services sector has strongly hinted that Barbadians could soon be made to pay higher insurance premiums.
Chief Executive Officer of the Financial Services Commission (FSC) Randy Graham Tuesday sounded the warning that the sector has been experiencing “one of the longest soft cycles ever seen, which has led to premium rates being low for long periods.
“This is good for consumers, but an issue we continue to monitor and ensure that individual company liquidity is not deteriorating to worrying levels,” he said, while reporting that Barbados continues to be ranked in the top ten globally as a domicile for international insurance, with 21 domestic insurance companies maintaining in excess of $3.2 billion in assets and paying out over $175 million in claims to persons annually.
The FSC official also reported that there were currently 35 credit unions in operation here, with assets totalling $1.94 billion of which $1.42 billion represents loans made to Barbadians.
However, he reported that there had been a “spike” in the non-performing credit union loans, adding that even though it appears to have levelled off and is now slowly declining, “appropriate provisioning for these loans and accurate estimations for net recoveries must be made”.
In terms of other challenges facing the financial services sector, Graham pointed to stress in obtaining actuarial valuations and attorney signoff for compliance in the occupational pension system. However, he assured that the majority of pension plans have now been registered.
He also highlighted shifts in the investment portfolio of mutual funds into more lending and real estate assets, saying the process now needs to be well managed.
However, overall, he said the country’s financial services sector remains stable with 21 mutual funds accounting for $1.8 billion in assets and over 300 occupational pension plans with nearly $2 billion in assets.
“So whereby the level of year on year growth has been sluggish, the total aggregate of invested assets, which are appropriately protected and being put to work, is substantial in this country,” he added.