Newly inducted president of the Insurance Association of Jamaica (IAJ) Dr Adrian Stokes argues that the General Insurance Industry continues to pay out too much for motor vehicle insurance claims, despite a five per cent decline in 2020.
“There were over 44,000 motor claims in 2020; that is 846 claims per week. We have to do something about the way we drive. Our bad driving habits lead to fatalities on the road and multiple crashes which impact motor claims,” Stokes said on June 2 at the IAJ’s annual press conference.
Figures from the Insurance Association of Jamaica indicate that in 2020, the industry paid out JM$16.4 billion in general insurance claims and that from this total, JM$13.6 billion or 82 per cent were motor vehicle claims.
Comparatively, in 2019, motor claims totalled JM$14.5 billion, accounting for 87 per cent of gross claims incurred for all categories, which amounted to JM$16.69 billion.
The companies within the general insurance sector are: Advantage General, British Caribbean Insurance Company, General Accident, Guardian General Insurance Jamaica, Grace Kennedy General, Insurance Company of the West Indies, Iron Rock Insurance Company, Jamaica National General Insurance, and Key Insurance Company.
Outside of motor claims, other categories of general insurance claims include commercial property, residential property, public liability, and employers’ liability — all of which have attracted a payout of less than JM$3 billion in the last two years.
Dr Stokes noted that the problem of high claims related to crashes is not unique to Jamaica, as the World Health Organization (WHO) has observed that low- and middle-income countries account for 93 per cent of road fatalities, although they have 60 per cent of the vehicles.
The IAJ head, therefore, called for a change in culture.
“There were over 44,000 motor claims in 2020; that is 846 claims per week… Our bad driving habits lead to fatalities on the road and multiple crashes which impact motor claims”— Adrian Stokes, president, Insurance Association of Jamaica
“While we await the Road Traffic Act to be passed to increase enforcement by the police and the use of technology in traffic management, there needs to be more personal responsibility,” he stated.
In the meantime, the IAJ has developed a database of all insured vehicles in Jamaica, the Insurance Vehicle Information System (IVIS), and has begun a pilot run with it, Dr Stokes revealed.
IVIS should come on stream within the next three months.
Upon its launch, the system will facilitate Tax Administration Jamaica (TAJ) in licensing motor vehicles without the need to present documents physically at the tax office.
“This will eventually set the stage for motorists to license their motor vehicles online. The system will also give the police digital access to the insurance status of motor vehicles, which we expect will increase motor insurance compliance, thus reducing the risk posed to road users of having an accident caused by an uninsured motor vehicle,” the president pointed out.
Stokes also noted that motor as a segment has been suffering from the increase in the price of imported parts.
“Due to the disruption in the supply chains as a result of the pandemic, the prices of some imported items have been spiking as we have seen happen in the commodities sector,” he explained, adding that the strong demand for a range of goods continues to push prices due to pent up demand.
“Many of the experts expect this trend to continue until the markets regularise. It is hoped that prices will settle by the end of the year,” the IAJ head said.