Officials to host public forum on rising insurance premiums
Concerns about local insurers are still not over so officials will be hosting a public forum about increases in insurance premiums — the cost of insurance.
Insurance premiums started to rocket for several residents and businesses after the onslaught of the 2017 disasters.
The Office of the Premier and the BVI Financial Services Commission (BVIFSC) are now giving local policyholders the opportunity through the forum “to voice their qualms about how rising insurance premiums have impacted them, their families and businesses, and for them to recommend solutions for pacing inevitable increases in insurance premiums”.
Insurance experts, stakeholders to present
Local experts in the industry such as Acting Director of the Insurance Division at BVIFSC Trevecca Hodge, and Colin O’Neal of the BVI Chamber of Commerce and Hotel Association will be presenting at the event.
At least one representative of a local insurance company,
“They will give an overview of insurance, discuss how insurance premiums are determined, why premiums are on the rise, the effects of premium hikes on families and businesses, and why deliberate underinsurance is not a recommended response,” a media release from the BVIFSC and the Office of the Premier said on Thursday.
What’s next?
The BVIFSC, which acts as the regulator for insurance companies operating in the BVI, is also expected to outline ‘what’s next’ from their standpoint.
In the meantime, news of the insurance forum comes days after the Andrew Fahie-led VIP government held a meeting with local insurance providers.
Fahie described the meeting as the first of many.
“We discussed many concerns such as under-insurance and the rising cost of premiums since Hurricanes Irma and Maria. I firmly believe that we are on our way to an amicable solution for all stakeholders,” Premier Fahie said while reporting on the meeting.
READ: Insurance Tribunal settles more than 40 complaints since hurricanes
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PUT THE HEAT ON THEM
I can not agree more
What next after the forum? My premium has jumped so high now that I may very well have to sell my house as I cannot afford to pay the exorbitant amount my insurance provider is now charging.
Youainhear go to the forum an suggest solutions?
Uncontrolled greed
No legislative control on what the greedy can charge.
The corruption of elected officials by said companies and others that give the greeders complete freedom to continue practice excessive unconscionable gouging to go unchecked.
These are the core problems within the business community of the BVI and worldwide. They are heart and soul of capitalism, unfortunately
Therefore the advertisement of so called forums and other waste ah time meeting are just, waste of public fooling time.
I do not anticipate anything coming out of this forum. Pure talk and then it will be dropped to the side of the road. It is not only insurance premiums that are exorbitant but also interest rates and bank fees. These costs can be included in the rent for those who rent properties but, such a move has its own issues. It’s a cycle.
A solution, large families band together to bring the prices down.
Another solution Premier, increase the tax free allowance from $10,000 to $20,000 and increase the employee tax rate from 8% to 10.5% for those persons making in excess of $85,000 per year since the average middle man annual salary is less than this
I agree with your comment. Increase the allowance and charge peopl eearnin more than 84,000 a higher rate. just like the work permit. the more you earn th emore you pay.
This will be nothing more than a talking shop. I’m gurantee it will be. Because of N**.C. My insurance premium was doubled and my monthly mortgage payment increased by almost $500. My property suffered no damage from Irma. None whatsoever so tell me why did N**.C raised by insurance rate which caused the bank to increase my mortgage while my salary remains the same. Is this fear? What power do I have under the circumstances?
OK, what about the landlords who rise their rent because of this insurance madest if the insurance company reduce their premium back to the ordinary price will the landlords drop their rent prices to.
@Anonymous: I am a landlord and I decided to absorb the additional expenditure when my mortgage rate increased because the N##C doubled my insurance premium. I couldn’t afford it but I did because I know my poor tenant wouldn’t not have been able to afford an increase in rent.
@Fed Up am not saying all are bad but it is norm that the landlords rise their rent everytime they have something more to pay so the government need to pass a bill to protect both the landlords and their tenants.
My insurance is also sky high. More than 1% of rebuild cost. But – it’s also understandable, looking at the amount they paid out after the hurricanes. What did people think would happen, especially those under insured?
What time???? and Where ??
28 March at bvifsc
6:15
that is totally true
Insurance is the transfer of risk from insured to insurer. It is also the pooling of resources to protect property and to transfer and share the loss of a few by the many. The larger the pool permits the distribution of loss among more people, lowering the cost among premium holders. Typically, among a small population like the BVI and other small locales, the premiums will be higher than in larger locales.
Hurricanes Irma and Maria damaged 70% of the housing stock, along with other facilities. The estimated damages were approx $3.6B. As result of the damages, insurance companies had to make large payouts. Consequently, to build up reserve funds and maintain solvency, insurance companies typically after huge payouts increase premiums. This is highly likely what is occuring among insurance companies in the BVI, resulting in shockingly higher premiums. In some cases, premium are doubling, putting much stress and strain on customers.
The BVI is highly vulnerable to natural disasters, eg, earthquakes, tsunamis, hurricanes……..etc. Thus, it is ideal for property owners to purchase replacement value. At a minimum, property owners should purchase insurance at 80% of replacement value. This would permit property owners to be reimbursed for a 100% of a partial loss up to the value of policy. High price policies will be an ongoing reality for BVI residents. The BVI should look for opportunities to increase the pool to lower cost.
Expect premiums to be high for the next few years until the reserves are built up again and to see new companies coming into the market that did not have the losses from Irma and Maria – when the new companies come in the premiums will go down as the old companies seek to retain their clients and compete.
The BVI/VI population is small and may be slightly north of 30,000. Insurance is pooling of resources by policy holders with similar interest, ie, property owners, to share in the risk of protecting their property(s). The larger the number of policy holders the lower the premium paid by each individual policy holder. Moreover, the larger the number of policy holders insurance companies can more effectively estimate the value and frequency of claims (Law of Large Numbers).
Further, it is easier to develop premiums and thus reduce risk exposure for insurers as the number of policy holders increases. In a small pool, ie, BVI or other locales with small population, the premiums are normally higher for insurance companies to assume the risk to protect policy holders assets.
Buying property insurance is for protection, not investment. Many policy holders may go decades, if ever, without having to file a claim. While other policy holders, may have the unfortunate need to file many claims. Policy holders are frequently heard lamenting that they have been paying premiums for a long time and have not gotten any return. Well, the benefit is the protection offered by the policy that policy holders pool their resources to share the risk. Generally,if a policy is cancelled, there is no payout.
Moreover, a home or business are many residents primary asset. And no doubt it needs to be protected. The preferred option of protection is replacement value. With under insurance or no insurance(self insured), policy owners are assuming some or all of the risk, respectively. Some policy holders may insure for less than replacement value but for at least 80 percent of replacement value. This option reimburses a 100% for a partial loss up to value of policy.
For example, if the replacement value of a house is $500,000, and the property owner insures it for $400,000, and the property incurs roof damages value at a $150,000 the full $150,000 would be reimbursed. On the other hand, if the home were insured for less than 80% of replacement value, the roof damage would be reimbursed for less than $150,000.
Alexago7901
Is the tag line on insurance companies as swindlers, con artists, scam artists……..etc justifiable? Has insurance agents over promoted underinsurance as a competitive measure/tool and now the chickens have come home to roost? Has consumers been buying a pig in a poke?
The random sampling of above blogs may suggest that there is clearly some misunderstanding of insurance basics. Further, a few comments touch on the core of insurance basics, ie, policy holders pooling of resources, importance of large number of policy holders, small size of territory …….etc. As such, an outcome of this forum should be establishing a public education and outreach programme on insurance basics. HLSCC should be engaged to develop and offer free seminars on insurance basics. And BVIFSC, the insurance regulator, can/should develop and make available pamphlets and other literature on insurance basics.
Insurance is a valuable community service whose negative image needs to change so that it can become a win-win for both the insured and insurer. Insurance companies must be in a financial position to meet the needs on the insured in a timely manner. One of the knocks on insurance companies is the long delay in processing claims.
To improve the level of service, insurance companies must a)maintain operational efficiency. b)calculate effective, fair and reasonable premiums, c)process claims as quickly as possible, d)mitigate claims after a loss…..etc. The insured(s)must a)understand the value of the product (option) being purchased, b)property insurance as oppose to whole life is for protection, not investment, c)morale and moral hazards cost and may drive up premiums for all…….etc.
Lastly, the BVIFSC, the regulator, must be become a more effective referee. Perhaps, an independent insurance commissioner should be appointed and be an office under the Premier’s portfolio.