Dr. Adrian Stokes (at Podium) Newly elected President of the Insurance Association of Jamaica, from left: Sharon Donaldson Vice President-General and Rosemarie Henry Vice President Life. at right is Orville Johnson,O.D., IAJ’s Executive Director. The President’s address was delivered at an IAJ Press Function held at the Jamaica Pegasus Hotel on Wednesday, June 2, 2021.
There is an old adage that says people do not plan to fail they simply fail to
plan. It is the same with financial planning, however many persons fail to
understand that the best financial plan will collapse if it does not
incorporate insurance planning. If the breadwinner passes away
unexpectedly or the house burns down without insurance it would result in
a significant financial setback for the family. This kind of contingency
planning and risk management is essential, and if we were not convinced
of its importance, then the COVID-19 pandemic was a reality check for all
of us, right across the globe. This was indeed a stress test if there ever was
Already we have seen that the economies that are recovering are those
such as China which contained the pandemic and the US which had
reserve financial capacity. At the individual level persons with insurance are
able to bounce back from economic loss far more easily than those without.
The value of Insurance is integral to all who purchase it, although there are
so many persons who are still reluctant to buy insurance.
Last year the industry paid out $16.4 Billion in General Insurance claims,
$13.6 billion of which were motor claims $24.4 Billion dollars in death and
living benefits from their individual Life Insurance policies and $ 20.1 Billion
dollars in Health Insurance Benefits. That is over $ 60 Billion dollars in
COVID-19 came upon on us last year as an unwelcomed visitor. With a
year now behind us, we are hopeful that we have passed the worst. The
industry like so many others received body blows last year particularly in
the months of April and May. There was a significant dip in business
especially when Portmore went into lockdown. Fortunately, during the
period of June through to December last year we saw business steadily
recovering in both the life and general sectors. It was a period where we
found many creative ways to stand with our policyholders who were going
through difficulty via a number of creative interventions such as discounts2
on premiums, lengthening payments and the waiving of fees. Our
organisations were forced to deal with the new environment which involved,
masking, social distancing and the minimizing of social contact.
The industry’s heavy investment in technology over the years, paid
dividends as we were able to respond and pivot quickly, by having team
members work remotely, meeting online and ramping up the use of a range
of electronic payment and service options. We are by and large ready to
operate in the newly emerging digital economy of the Fourth Industrial
Revolution, that COVID 19 has simply brought forward. This will no doubt
be the new commercial environment in the future.
We want to express our sincere thanks to our policyholders who made an
effort to keep their policies in force during this difficult year. Arguably,
COVID-19 with all its downsides heightened the awareness of the
importance of Insurance and the unpredictability of life’s Journey.
As we continue to recover from the negative impact of COVID-19 on our
economy, businesses and on all of us as individuals, we must commend
the Government for its handling of the crisis so far. Its approach to
contingency planning, has been commendable – setting aside money in a
Contingency fund, exploring catastrophe Bonds with Multilaterals and its
continued relationship with the Caribbean Catastrophe Reinsurance Facility
(CCRIF). This appreciation for the need for risk management is Insurance
called by different name.
Life Insurance protection is at the core of the Life Insurance Business, as it
seeks to provide protection for those dependent on the support of their
breadwinner, in the event of the breadwinner’s untimely death or disability.
It was gratifying to see that in 2020 despite financial constraints there was
an increase in the number of policies in force and there was a greater effort
by persons to secure higher insurance coverage.
Over the years, life insurance in Jamaica has become a vehicle for
investment as well as insurance protection. In fact, 60% of all policies sold
for over many years include an investment component. Indeed, the life
insurance industry has established itself over the years as the largest
mobiliser of medium to long term savings and investment in Jamaica. It has
over $360 Billion in Invested assets and is the largest player in the Pension 3
Fund Market with over $300 Billion dollars in pension funds under
We would like the Minister of Finance to hasten his steps to revise the
Investment Guidelines so the Industry can play a greater role in terms of
providing funding for both the Private Sector as well as Government
through Public Private Partnerships as we seek to rebuild our COVID
damaged economy. We also use the opportunity to ask him to advance the
Pension Reform Agenda to provide more robust pension arrangements,
such as vesting, portability and participation in multiple pension schemes. It
is estimated that only about 10% of our workforce are a part of a registered
pension scheme. This one is a win- win Minister. While we are at it, we
must also appeal to the Minister to speed up the Legislation for
Microinsurance so that persons with lower incomes will have an insurance
solution that is more accessible, affordable and with simple Know Your
Customer requirements that will give major support to Government’ s policy
of Financial Inclusion.
We now turn our attention to the General Insurance sector. As we begin the
start of another hurricane season, we are concerned that many Jamaican
residences and businesses have no property insurance in place, we
estimate that only just over 20% of homeowners have Insurance coverage.
Furthermore, most of these persons did not opt to putting the insurance in
place, it was demanded by their mortgage lender. As a result, persons very
often do not renew their insurance after they repay the mortgage leaving
themselves vulnerable late in life when it is virtually impossible to recover
from the financial loss of a house.
As we begin the hurricane season this is the perspective of one of the
experts. “For 2021, a likely range of 13 to 20 named storms (winds of 39
mph or higher), of which 6 to 10 could become hurricanes (winds of 74
mph or higher), including 3 to 5 major hurricanes (category 3, 4 or 5; with
winds of 111 mph or higher) are expected”. We implore homeowners and
businesses to contact your Insurance Company or Broker to ensure you
are properly covered. We also appeal to renters that you too need to
protect your assets and the contents you own in your rented space, as you
are also at risk so, please take the necessary steps before it is too late