Cayman Islands Insurance Association representative Nigel Twohey says the relationship between insurance companies and their policyholders does not have to be adversarial.
‘Insurers like to view us as the enemy,’ he said. ‘But we do not view you as the enemy. We like to see you as our business partner.’
Mr. Twohey addressed many of the post-Ivan complaints of policyholders during his presentation at last week’s Chamber of Commerce meeting, admitting that local insurance companies could have performed better in certain ways, but also saying claimants need to understand the enormity of the disaster.
Pointing out that Ivan caused about $1.5 billion in insured damage, Mr. Twohey, who had been in the industry for 27 years and worked in many Caribbean countries, said slower pay-outs should be expected with a very large catastrophe.
‘It takes us a while to get going,’ he said. ‘We needed to get adjusters here, to find them places to live and transportation, things that were very difficult after the hurricane.’
Even with modern technology, Mr. Twohey said the claims procedure is cumbersome. ‘I don’t have an answer on how that will change,’ he admitted.
One thing some insurance companies could have done better was in making partial settlements, Mr. Twohey said.
‘Insurance companies must be able to pay out interim payments very quickly,’ he said, offering a folksy analogy.
‘It’s like being seated in a restaurant and then becoming angry because you’re ignored by the servers. But if they bring you a glass of wine and a menu right away, you’re happy for a half-hour or so.’
Mr. Twohey said claimants were not the only ones wondering why the settlement process has not gone faster.
‘Re-insurers want to know why we haven’t paid more quickly, too. They’ve paid off, so they want to know why haven’t we,’ he said.
It’s the vastness of the claims that makes them slow, Mr. Twohey said, not, as some have suggested, because the local insurance companies are earning interest on what they have been paid by re-insurers.
‘It is not our money,’ he said. ‘It belongs to the re-insurers, so any interest that accrues is to their benefit, and I can tell you, it’s not a lot of money in any case.’
A key problem in the post-Ivan settlement process has been with adjusters, Mr. Twohey said, noting the criticism of some claimants that they have to deal with different adjusters time after time.
‘Yes, absolutely, this has happened,’ he said. ‘One of the problems is there simply aren’t enough adjusters in the world.’
Mr. Twohey said many insurance adjusters have businesses of their own, and they only intended to be here a month or so before they had to get back.
Others come here and because of the nature of the work, become too stressed to stay long.
Mr. Twohey said settlements can only be paid out after adjusters’ reports are filed. He pointed out that even the administrative task of getting the reports typed out has been difficult, and is something insurance companies will have to improve upon in the future.
Many people think insurance adjusters work for the insurers as their agents, something Mr. Twohey said was not true.
‘The normal rules of agency do not apply,’ he said. ‘We pay them to represent the claimant’s interest.’
Mr. Twohey gave an example of where an adjuster actually pointed out something the insured had missed in a claim, and the insurance company paid out the higher amount.
There is also a need for others to take a greater interest in the insurance process in the future, Mr. Twohey said.
‘Banks will take a keener interest in house values,’ he said.
The Government might also consider legislation protecting the consumer, something Attorney General Sam Bulgin hinted at in his opening address to the attendees of the recent Ivan Law conference.
‘Knee-jerk legislation is usually bad,’ said Mr. Twohey, noting that some would like to outlaw the practice of insurance averaging. Such legislation might protect consumers, but will lead to higher premiums, Mr. Twohey said.
Other possible legislation could give the Cayman Islands Monetary Authority more regulatory authority to do things like check reserves, re-insurance arrangements and the general behaviour of insurance companies.
‘A well-run insurance company has nothing to fear from this type of regulation, and we have no problem with this,’ he said. ‘But too much regulation is a bad thing. The more red tape insurance companies have, the higher your premiums are going to be.’
No matter what kind of legislation might be proposed, Mr. Twohey said the insurance industry would like to be involved.
Mr. Twohey said the insured should also become more involved in the insurance process.
‘You can treat your insurance broker as a business partner,’ he said. ‘Demand more from your insurance broker.’
Among the suggestions he had for people getting insurance was to ask more questions.
If, for example, they are getting two substantially different price quotes on something to be insured, they should find out why there is such a difference.
Most likely, people will find a significant difference in the type of coverage, like in the deductible amount or whether the policy was for indemnity or reinstatement, he said.
‘You may find out one doesn’t cover for hurricanes.’