Noel Thompson, Freelance Writer
LALOR
WESTERN BUREAU:
PAUL LALOR, chairman of the Insurance Association of Jamaica (IAJ), says insurance premiums must rise if the general insurance industry is to be financially viable, but there also may be more consolidation ahead.
The industry is experiencing tough times and is not making money, due primarily to stiff competition. There have been changes of ownership as the industry consolidates to cover losses.
"At the moment, the industry is going through a difficult period. We are struggling with the pressures of competition, which is good for the policyholders," Mr. Lalor told The Financial Gleaner recently.
"It keeps the rates down, but they need to go up. The companies are not making money in the business of insurance," he stated.
?We are struggling to make an underwriting profit and some of the companies are not doing as well as they should be doing.?
Against this background, Lalor said it was likely that existing policyholders, as well as newcomers could see some rate increases later this year.
In relation to motor vehicle insurance, he said it was almost certain that motorists had already started seeing increases, while property rates were presently being considered for an early, if not immediate increase, as the industry attempts to realign the balance.
?The companies that are in the industry now are fairly solid in terms of their strength. I don't think they are being dramatically impacted by the conditions of our underwriting results. However, if the current trend continues you may start seeing companies resorting to either selling or merging with other entities," Lalor warns.
He cited, however, that a smaller industry would allow stakeholders to perform better, as there were too many companies in the business.
"There have been some contractions, with Globe Insurance taking over Jamaica General Insurance Company, and the Dyoll portfolio went into Jamaica International Insurance Company," he said.
But with 11 general insurance companies (the island's five life insurance companies are in a separate category) remaining in the business, the IAJ president feels that there are still too many to contend with.
"I think that as the underwriting pressures continue to mount on us all and our desire to maintain business and having to charge lower rates, this will ultimately force a few to seek other options," he remarked.
