QUESTION: I manage a group of males and females who work in the entertainment industry. They share a common set of problems. They give insurance a bad rap. Most companies do not want to insure their cars. The few that offer coverage charge 'two arms and a leg.' Motor insurance is compulsory. Shouldn't insurers provide coverage to all who need it? Can you suggest anything to solve the problem?
B.G., Kingston.
Answer: Insurers do not like the risks that persons in your 'industry' pose. They are 'higher than normal'. Evidence of this is often found in insurers' refer or decline lists. These lists contain information about the risks insurers prefer not write or accept on special terms. Their views seem, on the surface, to be correct. Beenie Man's recent multimillion smash-up was a good example of this, they would say. Insurers do not appreciate the scope of this sector. Harold L. Vogel says in Entertainment Industry Economics: A Guide For Financial Analysis, it is one of the largest parts in the U.S. economy. Also, that it is fast becoming one of the most prominent globally JA included.
Entertainment covers a multitude of sins, literally. It includes movies, TV, music, broadcasting, sports, publishing, the performing arts, theme parks, toys and gambling. I have assumed for the purposes of answering your question that your clients work in the music industry. There are many reasons why they are having problems buying motor insurance. Some of them include:
Our Insurance Act does not prohibit insurers from applying a rule that is contrary to public policy. The Canadian Act, on the other hand, is vastly different. It says that insurers should exclude "the occupation, profession or employment circumstances of any person who would be an insured person under any contract" in deciding whether to issue, renew or terminate any motor insurance policy.
Many entertainers tend to fall in the high-risk 21-30 and 31-40 age groups. These two groups, which consist mainly of men, accounted for more than 50 per cent of serious motor accidents in 1999, according to official statistics.
There is a perception that persons in the industry tend to buy very expensive, high performance vehicles to match their egos and lifestyles.
Most insurers in Jamaica have not made profits writing motor insurance for ordinary folks with standard cars like you and me.
TAXI OPERATORS
Members of the entertainment industry are not the only group that motor insurers would prefer not to insure. Others include owners and operators of taxis, persons with two or more accidents during the last three years or with a number of traffic violations, high profile footballers, persons over 65 years old, owners of sports cars, persons suspected as being involved in the drug trade and young and inexperienced drivers. Persons in some of these groups can get insurance. Insurers simply charge more to compensate for the greater risk. Rates for standard risks tend to lower.
The most important step in solving your clients' problem is to find a good insurance broker to work with. That person should collect information about the individuals. Their gender, ages, driving experience, accident record, type of vehicles, details about traffic violations, motor insurance history and type of coverage. Once all these details are available the broker should be able to provide a range of cost-effective options tailored to the individual needs of your clients. Happy hunting.
Cedric E. Stephens provides impartial advice on risks and insurance. If you need free information or advice to solve a problem, write to The Financial Editor or, contact Mr. Stephens directly at aegis@cwjamaica.com
