Insurance coverage likely to become more restrictive
Stabroek News
August 6, 2002
The frequency of fires in the heart of the city in periods of heightened political tension would make conditions for new and expanded insurance coverage for businesses in these areas more stringent.
Managing Director of the country’s largest insurance company, Guyana & Trinidad Mutual Fire and Life Insurance Company (GTM), Errol Cheong, says the situation had not reached the stage where insurers were not prepared to offer coverage.
“There will be an increased cost and more restrictive conditions to policies,” Cheong said recently, noting that the insured might have to share some of the losses.
Since the December 1997 post-elections disturbances, fires have become predictable during bouts of heightened political tension and have seen a host of city businesses razed. The most recent was the fire of July 3 when two city stores were set on fire after an illegal protest march became ugly and the Office of the President was stormed.
Cheong noted that it was not only the insurance sector that suffered in these fires, but the “sheer economic waste” of the fires was ultimately borne by Guyana. He said arson and looting, especially the former, only led to destruction of property and irrecoverable losses which the economy could ill afford.
The GTM top man noted that insurance was a pooling of resources and the premiums by many were used to make good the losses of a few. He said that an increase in losses meant that the premiums would have to be increased. He also noted that the cost of reinsurance (borne by foreign companies) in the circumstances would also increase.
He said local insurance companies would continue to underwrite policies but this would be to ensure that the contribution to the pool was commensurate with the risk. He noted that the risk in this case had gone up.
Cheong said he did not see the situation reaching a stage where insurance companies would refuse to offer coverage in volatile areas of the city. He said that unless the situation degenerated much more, he did not see this happening.
Bish Panday, a leading city broker, shares that view. But noted that the situation did not bode well for the insurance sector or the country. He said that at the end of the day, the premium had to be passed on to policyholders.
He said he had seen signs of some companies maintaining rates and others cutting rates. He said there was a reluctance to offer new coverage in the volatile areas but this was just a knee-jerk reaction which would pass in a few weeks once the situation stabilised.
Looting and destruction of property had followed the October 5, 1992, December 15, 1997 and March 19, 2001 elections. Eight businesses were gutted on April 9, 2001 when fire was set to Kissoon’s Furniture City at Robb and Camp streets.
This was followed by a fire at the Guyana Refrigerators Ltd in Water Street.
After the unauthorised protest on July 3, the Payless Get More Variety Store was set on fire taking with it Fullworth’s.