Cedric Stephens | Changing the insurance mindset

Global financial services experts say Barbados is among the leading insurance centres in the Western Hemisphere. It ranks behind the Cayman Islands and Bermuda. Its insurance industry assets amounted to US$174 billion in September 2024.

By this index, that country’s insurance industry was 50 times the size of Jamaica’s at US$3.5 billion. Jamaica’s land mass is about 25 times bigger than Barbados. In addition to being much bigger than its Jamaican counterpart, the Barbadian industry is more complex. It includes traditional insurance companies and captives.

A captive insurer is a wholly-owned insurance company created by a business or group of businesses to insure its own risks, instead of buying coverage from a regular insurance company. A normal insurer sells policies to many unrelated companies. A captive insurer is set up by a company for itself or its affiliates, so it acts like an in-house insurance provider. A few local companies have set up captives in Cayman.

A Barbados Nation News report published last week led me to conclude that at least one big regional insurance player is still flailing in the dark with decades-long issues like those affecting its smaller Jamaican brethren. This was surprising, given Barbados’ vaunted educational system and the complexity of its insurance market.

Paul Inniss, a former banker and now executive vice-president and general manager, Sagicor Life Insurance, expressed concern that “homeowners are still not adequately covering their assets, and, in a number of instances, more people have no coverage at all”.

Mr Inniss’ discovery led him to argue that it was “critical for the insurance industry and the country generally to help people to help themselves”.

When was the last time, I asked myself, he or his colleagues sat down with a group of customers to get feedback about their experiences with the company’s products, interactions with employees across the value chain, including the claims process? What ideas for improvements did they make to improve service delivery and increase trust? Were the company executives looking inside or outside to learn the extent to which its processes and people were causing and/or contributing to the problem he identified? And, finally, did disciplines other than standard economic theory – like Caribbean history, sociology, and behavioural economics, for example – offer clues why homeowners in Barbados and Jamaica opted to self-insure their most valuable assets?

My June 29 piece argued that Jamaican insurers were not contributing enough to national development. Here are two random examples that I saw last Wednesday that show how initiative-taking Asian insurance regulators, industry players and others are collaborating to find solutions to national problems like those that are being experienced across the Caribbean.

Case No 1: Sri Lanka

Sri Lanka has a population of 23.2 million people. It is highly vulnerable to natural disasters because of its location. It ranks among the top countries at risk because of weather events, according to the Global Climate Risk Index. The country’s insurance regulator, the Insurance Regulatory Commission of Sri Lanka, IRCSL, has launched a nationwide campaign to increase awareness on the benefits of insurance and to promote financial literacy.

The campaign, with the theme of ‘Insurance for all: for a secure future’ aims to improve public understanding of insurance, promote financial literacy, and increase insurance penetration across all regions of Sri Lanka, with a particular focus on underserved rural and semi-urban communities.

This initiative began with a series of events designed to engage the public and promote dialogue between the insurance industry and local communities. For the first time in Sri Lanka’s history, all 29 licensed insurance companies, along with key industry stakeholders including the Insurance Association of Sri Lanka, the Sri Lanka Insurance Brokers Association, and the Sri Lanka Insurance Institute came together under one platform led by the IRCSL.

This collaboration marks a significant milestone in Sri Lanka’s insurance sector, reflecting a unified commitment to promoting insurance awareness, enhancing financial literacy, and advancing inclusion across the country.

Roadshow and community engagement

To commemorate the launch of the campaign, a roadshow was conducted in Matara City and surrounding areas, where over 500 representatives from life and general insurance companies actively participated in conducting direct outreach to the public through educational materials, interactive activities, and promotional events. The roadshow created widespread visibility and encouraged people to learn more about the role of insurance in safeguarding their financial well-being.

A road safety and insurance awareness programme was held for schoolchildren which was attended by 1,500 students and teachers from several schools in the Matara District. It featured interactive demonstrations and practical learning experiences aimed at promoting road safety and introducing the fundamentals of insurance to younger audiences. The session was conducted in collaboration with the Clean Sri Lanka Project, the Sri Lanka Police, the Ministry of Education, and other key stakeholders.

An insurance awareness workshop for 1,500 participants was conducted and participants included advanced-level students, university lecturers, university students, government officers, and the public.

This campaign marks a major milestone in the IRCSL’s ongoing efforts to improve financial inclusion and insurance literacy across the country. By taking the initiative directly to communities, the commission seeks to bridge knowledge gaps, foster public trust, and empower individuals and families to make informed financial decisions. This launch is only the beginning, with similar awareness programmes planned in other districts in the coming months.

Case No 2: Thailand

Thailand’s population of 71.6 million people is three times the size of Sri Lanka’s. It is vulnerable to the same kinds of natural disasters like Jamaica. Over the past few months, Thailand’s insurance regulator, the Office of Insurance Commission, OIC, has been fostering cooperation between government agencies, the insurance sector, and the public, to improve service standards, reduce the number of complaints and disputes, as well as build public confidence in receiving transparent, fast and fair services.

To boost confidence in the market, the regulator has instructed insurers to depute representatives with decision-making authority for dispute mediation processes, as well as prepare complete information and evidence to ensure effective negotiations.

There was also a discussion on the development of a dispute mediation system via the Microsoft Teams platform, to increase convenience, reduce time required, and support the OIC system to increase the efficiency of data linkage between the regulator and insurers.

Insurers must promptly notify the OIC of major events affecting the public, and follow up on payment of compensation to ensure that it is prompt and fair, as well.

Some of the aspirants vying for political office in the next administration have now jumped on the Rural School Bus System bandwagon. Bravo. Those risks are a small slice of the panoply of risks facing the society.

This column would, obviously, be most interested to learn about the Opposition’s proposed strategies for the more consequential risks associated with climate change and natural disasters, and the role of the Financial Services Commission, beyond the twin peaks regulatory framework. Details about the existing strategies are easily available.

Cedric E. Stephens provides independent information and advice about the management of risks and insurance. For free information or counsel, write to: aegis@flowja.com or business@gleanerjm.com.