Sabrina N. Gordon, Business Reporter

The Sagicor Life Jamaica Limited building in New Kingston. - File

Leading insurance company, Sagicor Life Jamaica Limited, has increased premium rates on several of its products, saying it was passing on to clients increased operational costs that the company could no longer absorb.

The changes take effect July 1.

"The current policy charges are now insufficient to cover the actual charges and we have had to take the very difficult decision to pass on a small portion of the increased charges to our customers," said Sharon Lake, senior vice-president for insurance operations.

Policies to be affected

Lake said, however, that the company, formerly Life of Jamaica, was not in a position to release the information on the number of policies to be affected, but indicated it would not affect all plans.

Sunday Business has learned, however, that policyholders of at least two of the 20 life and health insurance products have received notices of the pending increase.

The size of the adjustments vary across policies, with one of the reference points for the calculation being "the attained age of the life insured at the date of change", said Lake.

One policyholder, who is insured under Triple Protector Plus, a non-medical plan that provides the life insured with a cash benefit in the event of critical illness, has been advised of an additional $16.67 charge per month on the $5,038 already paid.

Another was increased by just over $13.

Triple Protector Plan

The Triple Protector Plan, which was launched in 2003 for persons between the ages of 18 and 60, covers nine critical illnesses, including blindness, coma, deafness and loss of speech.

There are currently about 24,000 of these policies on SLJ's books.

Also affected is ShorePlus, an individual health plan designed to provide primary medical insurance coverage for Jamaican residents who don't have coverage through their employer or other groups, will also reflect an increase in its premium rates.

The ShorePlus is a yearly, renewable plan available to any individual up to the age of 65 years, and ceases at age 70.

The increases under that plan range from $4 to $40 per month.

"Where the policy provisions allow for an increase in premiums, policy fees or administrative charges, we will be applying increases averaging about $10," said Lake.

Traditionally, insurance companies adjust premiums at the policy anniversary, but according to Lake, SLJ's policy provisions allow for adjustments at any date - it's in the fine print.

"The company has the right to change the premium rate at any time," she advised Sunday Business.

"The new premium rate will apply only to premiums that are due after the company has given notice in writing 45 days in advance of any such change."

This means that SLJ would have had to advise policyholders by mid-May to meet the July 1 date.

SLJ is a highly profitable company - net profit last year was $3 billion - with $919.6 billion of insurance in force at yearend 2007, almost four times the level of business recorded five years prior.

Its new insurance sales have similarly risen consistently to reach $79 billion, reflecting new premium income of $2.9 billion.

SLJ also wrote 43,081 new life policies last year, boosting the portfolio to 322,884 policies in force.

That level of business has given the insurance giant revenues of $17 billion, 14.8 per cent above top line income recorded in 2006, and triple its position of five years ago.

But its expenses have also been growing, and last year they increased at a faster pace than revenues.

Total expenses amounted to $9.4 billion, which was 16.4 per cent more than the $8.2 billion recorded in 2006.

SLJ president Richard Byles has already signalled that his focus in 2008 would be growing revenues for the company, and that cost containment would be a key factor in the process.

But in advising clients of the premium increase, SLJ said that with calendar inflation for 2007 running at 16.8 per cent, other measures were required.

Improve efficiency

"Over the years, we have successfully contained our policy administration costs at a level whereby we were able to absorb the costs through internal measures taken to improve efficiency and productivity," said Lake in correspondence to a policyholder.

"The time has, however, come when, unfortunately, we are left with no alternative but to pass on to our customers a small measure of these increased costs."

For the year 2007, SLJ's expense ratio was 19.2 per cent, a slim 0.4 per cent lower than the 19.6 per cent achieved in the previous year, but still putting the company ahead of other players in the industry.

sabrina.gordon@gleanerjm.com