Property damaged by Hurricane Ivan in Cayman last September.
GUARDIAN GENERAL Insurance Limited the holding company for West Indies Alliance Insurance Company paid out a total of US$172 million in claims in the Caribbean region resulting from Hurricanes Charley, Frances, Jeanne and Ivan. Of that amount, nearly US$150 million went to property
owners in the Cayman Islands.
This was disclosed by Peter-John Thwaites, managing director of West Indies Alliance Insurance Company, in an address at a broker seminar hosted by his company and held at the Knutsford Court Hotel, last week
Mr. Thwaites said that in spite of the huge claims, Guardian General Insurance Limited was still on track to make what he described as "a small profit before tax", without any impairment to the company's balance sheet in 2004.
DEVASTATING IMPACT
In reviewing the devastating impact that the hurricane had on the region, Mr. Thwaites warned that insurance coverage providers had to prepare for the next catastrophe. "In Jamaica, Hurricane Ivan opened our eyes to a number of things which our industry had learned after Gilbert, but had forgotten in the 16 years that went by," he said.
Among the issues which he noted needed to be addressed, were poorly drafted policies, poorly-completed broker slips, ill-advised extensions that were either "a giveaway" by the companies, or had no application to the cover and a lack of understanding on both the parts of the insurance companies and their brokers of the coverage that was needed in case of a hurricane of the magnitude of 'Ivan.'
MOTOR LIABILITY CLAIMS
He also disclosed that
last year the local insurance industry had to underwrite a total of $396.5 million in motor liability claims, which was up from $105.3 million in 2003. "The motor accident rate is very high, so reinsurance prices have gone up," he said.
Mr. Thwaites added that this situation is of particular concern, as the fees for motor and liability coverage are now well below what they should be. "Although we can say the increased premiums must be borne by those who have the accidents, there is no doubt that an across-the-board inflation increase is necessary," he continued.
Guest speaker at the function was David Waller, general manager of Axis Jamaica Limited and chairman of the Axis International Group of loss adjusters and risk surveyors. He said for the first time, insurance claims resulting from Hurricane Ivan were subjected to the 2 per cent deductible and the universal average clauses. However, he noted that there was a widespread lack of understanding of both conditions of insurance coverage offered and called on the insurers and brokers to educate individuals and the business community on the details.
In addition, Mr. Waller pointed to the inefficient manner in which policies are worded. For example, he said some clauses in the insurance policies - such as the Public Utilities Extension which deals with the loss of electricity supply - have several variants. "This leads to inadequate coverage and the policyholder not getting what he deserves," Mr. Waller said.
