Editorial
Stabroek News
April 22, 2001

Several insurance companies are declining cover for exposure in the commercial areas in the city as well as outside Georgetown, insurance broker, Bish Panday said on Thursday.

Panday said no new cover was being afforded and any area of cover offered was very restrictive and without the full range of perils.

"This is because of their [the insurance companies'] perception, real or imagined, that the losses can escalate," Panday of P&P Insurance Brokers told Stabroek News.

This perception was fuelled by the tense political climate, which led to two fires in the city last week and saw several business premises being gutted, leaving millions in losses to be recovered from the insurance companies.

Hans Barrow, another insurance broker, confirmed the difficulty in securing fire insurance in the current political climate.

"The insurance companies are being very selective at this time and the high risk areas like the commercial centre will be problematic," Barrow said. Barrow heads Insurance Brokers Guyana Ltd and is aware of cases where persons have been turned down for insurance coverage.

Peter Abdool of Abdool & Abdool said the cautious stance being adopted by the insurance companies was a reasonable position in the face of the risks involved.

Abdool said that in the run up to the March 19, elections and in anticipation of the atmosphere which would have followed, his firm wrote to its clients advising them to ensure that they were fully covered and they did.

He also indicated that apart from the limited coverage, which would be offered now by insurance companies, the climate made it difficult for them to secure reinsurance. This means that the risks being taken by insurance companies could not be spread out.

"It would be difficult in these circumstances and the insurance companies would move to limit their losses," Abdool stated.

He said it would be appropriate in the circumstances for the insurance companies to apply a higher-risk premium or even refuse coverage altogether. His information was that not all of the companies were refusing coverage but that they were opting not to provide coverage on a "willy nilly" basis.

"They are being quite cautious and it is their prerogative," Abdool stated.

Officials of lead fire insurer, Guyana & Trinidad Mutual Life and Fire Insurance Company, could not be contacted for comment.

However, Dennis Moore of CLICO, which also provides cover for fire, said he was unaware of the insurance community's reluctance to provide new cover. Asked whether his firm was providing new cover, Moore said "no comment".

Asked about the effect of the damage being done in the city on underwriting, Moore said that when these treaties were up for renewal, these issues would have to be factored in.

One broker told Stabroek News that if the unrest in the city continued and more damage was done to property, the underwriters in London might very well give notice of cancellation for the perils of riot, strike, malicious strike and civil commotion.

Following the 1961 riots in the city, which saw widespread damage and a court block on compensation because the proximate cause of the destruction was riot, businesses in Guyana moved for coverage from civil commotion, riot and malicious strike and terrorism and sabotage.

However, Stabroek News understands that some businesses, which felt that they were under no threat cancelled their insurance coverage some time ago and when they approached companies for cover in the current environment were denied such cover.

Stabroek News was told that GTM & CLICO were reported to be among those insurance companies reluctant to provide cover in this period. (Gitanjali Singh)