Cayman’s local insurance industry may be reshaped owing to the level of insurance payout because of damage by Hurricane Ivan and a suspected high number of un-insured or underinsured homeowners.
Based on reports of the insurance companies, the Cayman Islands Monetary Authority estimates a total insurance payout of $1.15 billion. Of that amount, $53.9 million is for motor claims.
Experiences after the unprecedented beating Grand Cayman took from Ivan have prompted CIMA to announce a mid-2005 review of the insurance industry, and the companies saying such a step is welcome because there are a number of issues that need fixing.
The CIMA review in collaboration with the private insurance industry operators comes at the urging of Cabinet, which has received several complaints concerning underinsurance, and adjusters deducting motor compensation because Government slashed import duty by 10 per cent.
‘It is basically to see the extent of this whole issue of underinsurance,’ Cabinet Secretary Orrett Connor said yesterday in explaining the reason behind the Government’s request. ‘They’re trying to determine what is the extent of it, and what is the cause.’
Such a probe with a view to have action taken has the full support of Cayman Islands Insurance Association President Danny Scott.
‘I am hoping that we as an industry can do a self-evaluation and ensure that this doesn’t happen again,’ he said.
He added that Cayman is not alone in these matters of insurance payment and coverage. ‘Every island is going through exactly the same turmoil.’
Mr. Scot’s concern about the tumult on post-Ivan Cayman has to do first with uninsured home owners.
‘We need to get together to do something about these people,’ he said.
The type of solution seen by Mr. Scott for uninsured properties on Cayman Islands – which is subject to storm threats annually – involves probably a creative partnership between the private sector and government.
He wants talks with the administration to find a way of providing coverage for those who cannot afford home insurance instead of government having to foot the entire bill when a catastrophe occurs.
‘Why would you want to pay for the effect of a 100-year event, rather than pay for the effect for a non-event every year?’ he asked. ‘We need to put some sanity back into the game as far a those people are concerned.’
The second worry is about persons who initially got themselves fully insured and later became under-insured owing to rising costs.
‘Because premiums are going up, we need to get the banks to be a little more tolerant of consumers… we don’t want this to happen again.’
Mr. Scott said that private businesses, especially small ones, also have to be given means toward adequate coverage. ‘In conjunction with the banks they could become self-insured and mitigate the burden.’
‘We want to deal with those things going forward. This should never happen again,’ he added.
Mr. Scott said he had knowledge of an adjuster computing a car insurance compensation claim and deducting the 10 per cent import duty reduction that Government introduced.
He was emphatic on this issue: ‘That should not be done… Nobody, no insurance company has the right to do that.’
He said that adjuster was made to re-do the claim award to include the missing 10 per cent.
He explained that in writing a policy for full insurance coverage, the insurer takes upon himself to ensure full recovery by the insured.
‘We undertake to put you back in the same position you were in before the disaster.’
He said the value before the storm had no 10 per cent across the board import duty reduction, and must be treated that way.
As president of the insurance association, Mr. Scott wants to see more communication coming from the industry to create public understanding and a better image for the companies.
One such case involves British Caymanian, which had closed its doors to customers to conduct an audit.
‘I have absolutely no information. They have not given me any information in my capacity as head of the association,’ Mr. Scott said.
British Caymanian Marketing Manager Carl Brown told the Compass that his company intends to pass on the relevant information to the association, but in due course.
He explained that during the processing of claims, the company’s overseas re-insurers asked to be brought up to date on the outstanding amount to be paid out. Assembling that data required involvement of all staff, and the decision was taken to temporarily close doors until the urgent task was completed.
‘We are not going to go away for sure,’ Mr. Brown said to dispel any mis-conceptions about the now-reopened British Caymanian. ‘We are a company that is going to remain.’
The company issued a press release saying that it re-opened the doors Tuesday, and up to that time it had paid out $100 million in claims.
As of 10 December CIMA said the total amount of money paid out by all insurers was $343.2 million.
‘We have the largest claims on the island,’ Mr. Brown said, and revealed that 80 per cent of claims were already met.
He said that 25 per cent of the money disbursed went to motor insurance claims, an area for which he indicated his company also has the largest share.