1) What are the major challenges facing the Insurance Industry in the Caribbean these days?
There are three issues impacting the industry:
a) The first is the shrinking and struggling economies that have caused an overall downturn in absolute amounts of insurance needed and purchased. As volumes decrease, some competing insurers have dropped prices in order to attempt to retain their volumes through increased market share. This in turn leads to less profitable business which impacts companies’ income and ultimately their balance sheets. The silver lining here is that for a short while, consumers will be paying less.
b) Lack of suitable investment opportunities. Insurance companies by their nature keep substantial reserves on hand to pay future claims. The amount of these reserves are mandated by regulators and are developed annually by actuaries. These reserves need to be invested in a prudent and effective manner. As the economies have slowed and global interest rates have plummeted companies are hard pressed to find appropriate investments and this would have caused a reduction in investment income. Investment Income is an important factor contributing to the overall income of an insurance company and this puts pressure on pricing and is forcing insurance companies to greatly improve operational efficiency by becoming more automated.. Once again there is a silver lining as these new efficiencies are driving customer-centric initiatives that will deliver both better outcomes for our clients and provide long term productivity gains for insurers.
c) Another issue facing our industry is the high number of Insurance Companies operating in Barbados in the general insurance sector relative to the size of population. Competition is great but some of the smaller companies may not be able to achieve the scale for efficient operations and because of this the industry may be ripe for consolidation. Consolidation usually results in improved scale of operations which can lead to further productivity gains which ultimately have a positive impact on companies and more importantly, the end consumer.
2) The whole culture of insurance is one where the customer often feels they are paying for a service they may never need. Is this a fair assumption and can the industry do more to promote the benefits whether tangible or not?
Well in fact we actually hope that customers don’t need the benefits as if they do, that means something has gone wrong or badly for them. Having said that, we are in the business of paying claims and providing benefits of literally 10s of millions each year to our customers. But importantly insurance is about confidence. Consider: would you invest in a property or develop a property that was not insured? Would you be comfortable knowing you could lose your entire investment if a chance fire, flood or storm ruined the development? How many families with a deceased breadwinner could afford to stay in the family home with a mortgage payment that was based on two incomes? Insurance allows people and businesses to plan and invest for their future with confidence. Certainly as an industry we could do a better job of communicating the benefits in total. Consumers should know that the industry pays out 100s of millions each year.
Going without insurance is in essence assuming a risk yourself or self-insuring. This is not a viable or practical option for most consumers. Could most people pay for the rebuilding of their home that was destroyed by a fire? Insurance is a wonderful financial vehicle that allows those risks to be transferred to us - with peace of mind.
3) There is always the feeling that the good customers are paying higher premiums because of the bad customers. Is there any way benefits or concessions can be given to loyal customers similar to the No Claims concession with car insurance?
The whole philosophy of insurance is risk sharing where each customer pays a little (the premium) so that those that claim can receive a lot (the benefit). Proper pricing and underwriting considers the risk profile of the insured. For example, it is known that young females as a whole are safer drivers than young males. That is why we offer a significant discount to female drivers. The key however is having the data to make these distinctions – unfortunately it does not always exist.
So too should a healthy individual pay less than an unhealthy person for their life insurance. Mortality rates do differ significantly by gender, smoking status and build. A healthy, non-smoking female would pay substantially less (as much as half) than an obese smoking male. Clearly there is a difference in life expectancy and that is reflected in the cost.
This is what Underwriting is all about and is something that all insurers take very seriously.
We value all of our customers but especially our long term customers by offering a Loyalty Discount program on the Property and Casualty business where we do provide discounts to our customers who have been with our company for over five years. We are in the process of enhancing this program to make it even more meaningful to our customers.
4) You have visionary plans to grow ICBL business in the future. What changes are you going to introduce?
ICBL is a wonderful company with a deep heritage in Barbados. We’ve grown from our roots as a Statutory Corporation working primarily with government and government employees to a viable leading commercial insurer able to compete effectively in all markets.
Over the past three years we have devoted a substantial amount of our resources into new, innovative technology platforms. Our world is now digital and we are embracing that change as we become more and more customer-centric.
Our products and services will become more accessible in whatever way our customers want: in person, through our quality professional agents and brokers, via telephone, on-line, mobile and through their workplace. We want to do business in the way our customers chose.
Those that know me know that I constantly ask our team: “What does this mean to our customer? How will (a decision) impact them?” Our customers’ expectations are shaped not only by our competitors but by the total of their consumer experiences. If I can buy something on Amazon in minutes and track the delivery, shouldn’t I come to expect that same experience from all firms with whom I do business? Our customer’s service demands are changing and we must not only meet them but anticipate them and provide them proactively.
5) ICBL is well known in Barbados, but not seen as one of the big players in Caribbean Insurance. Is this a fair reflection of where the company currently stands and is size relevant?
Well, not only are we well known, but for many lines of business we are the market leader here in Barbados. I’m proud of our success and the fact that the company has been prudently managed and has one of the strongest balance sheets of any insurer in the Caribbean. As to the rest of the Caribbean, we are part of the BF&M Insurance Group, comprised of BF&M based in Bermuda, Island Heritage based in the Cayman Islands and of course ICBL here in Barbados. Together we are by far one of the largest groups and cover most every jurisdiction in the Caribbean. If we were one brand we’d be better known and consumers would know of our size. If what you say is true, I guess we better step up and tell our story better!
Many of our corporate customers do business in multiple jurisdictions and require multi-country coverage’s. Together with our sister companies we are able to provide them with the regional coverage’s they require. Further, our combined group financial strength and overall capacity is recognized by the preeminent rating agency, AM Best, by granting us the highest rating in the entire Caribbean.
6) Are there advantages to having all your insurance needs captured within the ICBL portfolio?
Well of course I have to say yes to that as I truly believe in our company. More specifically however there are coverages that when bundled allow us to offer a meaningful discount. For example if coverage A was $100 and coverage B $200 then bundling might allow us to offer them at a total of only $250. More importantly than just cost however is the improved customer experience. Rather than having to develop two or more relationships, we can service our customers with just one call.
As we develop more innovating coverages we are looking to extend this philosophy to a broader range of our offerings as we further embrace and roll out the technologies in which we’ve been investing.
7) Finally, if you could change one thing in your industry at the flick of a switch what would it be?
One word: Accountable. We have many regulations in Barbados that have been built up over the years by learning from some of the best regulated countries in the world. It is important that our regulators continue to fairly and firmly enforce these regulations for the benefit and safety of all. Furthermore there needs to be accountability in claims and appropriate limits set in order to develop actuarially sound pricing that ensures a strong, viable industry. A strong industry allows individuals, corporations, governments to make plans and invest with confidence that if something happens that their insurance will restore their position.
BIO…
Ingrid Innes is the Managing Director and CEO of the Insurance Corporation of Barbados Limited (ICBL). She has been in the industry for over 30 years and has a distinguished career that included service in Canada, United States and Bermuda. She is highly regarded as an innovative and results driven leader with an impressive track record of success. She holds an MBA degree in Business Administration and an Advanced Graduate Diploma in Management (AGDM). Ingrid can be contacted by telephone at 246 434 6075 or by email at IInnes@icb.com.bb