Higher premiums

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.

Randy Graham
Randy Graham

“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.


2 Responses to Higher premiums

  1. Phil September 15, 2016 at 8:19 am

    I can understand Mr.Graham’s sense of reasoning but unfortunately that will not harbor well with policy holders. I fear I see a significant fall in sales coupled with the fact that many current policy holders will cash in their policies simply because of these overtaxing situation, high cost of living and unemployment. as there are lots of policy holders being made redundant, and just cannot pay their premiums. It’s a matter of financial survival and Insurance companies are best successful in buoyant economies. Figure it out.

  2. Hal Austin September 15, 2016 at 1:53 pm

    How can higher premiums be good for consumers? Mutual funds and insurance companies should be investing in gilts and equities, not real estate. For the mistake in such portfolio management, see Clico.
    Most illiquid asset should be off bounds for insurance companies.
    For mutual funds, the regulator needs to look at the assets of the funds. Why should a mutual fund be investing in a Canadian ski resort? Who benefits from this? Is this a taxable benefit? Do politicians and civil servants benefit from this?
    Are these benefits declared to the tax man?
    Assets of Bds$1.2bn divided by 21 is not much. What controls does the regulator have on the 300 occupational funds. Who manages these funds? If a company goes bankrupt who is to blame? Will the scheme members be protected?


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