Thwaites
Denis St. Bernard, Contributor
GLOBE INSURANCE, the largest Jamaican-owned commercial property and liability company in Jamaica, has decided to take a more transparent approach to doing business, says managing director Evan Thwaites.
Mr. Thwaites was forthright in his comments for the need for greater transparency, which he agrees is a major problem in the sector.
"We in the industry have a tradition of guarding information which is very important to our clients and as a result we are sometimes viewed as suspicious. This culture has to change if the industry is to move forward and we hope that the others players in the sector will also pick up this initiative and open their doors to the insuring public.
"Insurance is about security, nothing else and people must therefore feel confident about the piece of paper we give to them, which guarantee our ability to pay, hence we will be open to the public regarding our affairs. We need more comment and analysis on the conduct of general insurance," said Mr. Thwaites.
At the meeting, Globe furnished their financials for 1999 and went a step further in releasing publicly their unaudited figures for June 2000, which showed a relative strong Balance Sheet with a net current asset of $300 million, total asset of $1.1 billion, total shareholders equity of $858 million, unappropriated profits of $517 million and $288 million insurance fund.
The question of greater transparency and information sharing although not a traditional practice in the sector, should not be an issue, as under the Insurance Act any member of the public has free access to any company's Balance Sheet. Section 90 of the present Act outline that any person may, upon payment of the prescribe fee, inspect at the Office of the Superinten-dent, during normal working hours, any document furnished to the Superinten-dent under section 30 and make a copy of, or extract from, such document.
Under Section 30 it is mandated that all accounts e.g. Balance Sheets, P&L , Income & Expenditure etc. shall be deposited with the Superintendent of Insurance within six months after the close of the period to which the accounts relate.
Therefore if anyone wants access to any company's financials, they are free to secure this by law from the Superintendent's Office, they can then analyse each company's status by asking all the relevant questions or get copies of these financials and have them analysed by someone who can do so as this is your right.
Under the proposed Insurance Act it is proposed that the company's financials should be submitted on a quarterly bases. At the moment this is required on an annual basis.
In a recent interview, the ex-Superintendent of Insurance, Patrick Taylor, expressed great concerned about this development, stating that in the past and even up to the current period many insurers fail to meet the six-month deadline, after one year, (a total of 18 months), as required by the current Act. Further there seems to be no enforcement or penalties in place to force compliance. Mr. Taylor believes that this is where the main focus of the regulators should be, in assisting the sector to do the basic things right and maintaining these standards, instead of creating bigger hurdles to climb.
Mr. Thwaites believes that there will be a major consolidation in the industry, which has already started where we recently saw the closure of VCI, CHIC/NCB and EAGLE GENERAL to name a few. This he believes will accelerate when the new Insurance Act comes on stream, which then will require greater capitalisation, accountability, standards and solvency margins.
The solvency margin is ratio between capital and surplus divided by net written premiums, the acceptable internationally solvency margin is around .3 to .4, in Jamaica however it's averaging around .1. The new Act is expected to strengthen these levels to meet those of international standards.
Mr. Thwaites believes that the more professionally-run companies will distant themselves and become the dominant players in the market. The ownership structure of some of these companies may have to change in order to efficiently, effectively and expediency meet the new challenges ahead and speculated that a maximum of four or five players would be left in the market, namely two large players and two to three medium to small players.
He called on the public to be more aware and to take time out to access the sector regarding the financial strengths of the companies operating in the market and we should not just insure with anybody who puts up a sign saying that they are doing insurance, they must have the necessary financial backings, ended Mr. Thwaites.
Denis St. Bernard is a marketing & insurance consultant. He is also the co-host of Risky Business, a radio programme which deals with risk & insurance matters.
