PHILIPSBURG–NAGICO chairman Imran McSood said education of the public in regard to understanding insurance matters by engaging insurance brokers and agents, having more public sessions, holding seminars on specific insurance questions, and working more closely with regulator Central Bank and the counterpart on the French side are part of changes NAGICO is pursuing in learning the lessons from Irma.
“I would like to see, in agreement with the Central Bank, a better use of the Ombudsman. It’s been under-used in the frenzy over disputes and insurance settlements. One can request the Ombudsman to intervene and even mediate on your behalf but I have not seen it happen here. It may be that our Ombudsman is undermanned.
“The Central Bank is a sort of Ombudsman in terms of disputes, but the Central Bank may not have the time or manpower either. The Ombudsman role in most countries is to hear disputes and ensure good public policy is maintained. I think the Ombudsman, in addition to the Central Bank would be useful. There’s no intention to take away any authority from the Central Bank, so it would have to be discussed so all parties are on the same page,” McSood said.
“In the event of a catastrophe like Irma, a tribunal or Ombudsman is where disputes can be referred to professionally and logically before they get to the media. Most disputes concern legal documents which the media is not necessarily sufficiently knowledgeable about.”
To strengthen the industry, he suggested St. Maarten Insurance Association and St. Maarten Insurance Brokers Association become more engaged in informing the public.
“At NAGICO we have strengthened our risk management. Risk management comes in various forms. There is reputational risk.
“If there’s one lesson learned after Irma it was that NAGICO spent more of its time and energy dealing with people’s claims than engaging in media, reputational and damage controls. We dismissed that, believing that if we settle most people’s claims satisfactorily our actions will speak better than words. But in this modern world of social media we need to strengthen risk management, particularly reputational risk.”
McSood said one of NAGICO’s concerns for 2018 was whether the reinsurers would stay on board and support insurance companies in the Caribbean.
“We are a company that ended up, between all the islands affected, paying over US $800 million in claims after the 2017 hurricanes. But I’m happy to say the reinsurers are standing by NAGICO and we are able to provide reinsurance at levels we consider suitable to cover losses.
“A lesser concern is the current state of repairs on the island. We have paid over 90 per cent of claims with the exception of the French side where 70 per cent of our claims have been paid. That compares with the market that we understand is under 50 per cent. So, we are way ahead of other insurers on the French side.
“There are a lot of unrepaired properties, or in the process of being repaired, here and in other islands. Another category-five hurricane would really concern me and damage could become more extreme. We have factored that in by increasing the amount of reinsurance protection we have.
“I’m also concerned about the government funding on both sides of the island. We want to see some action. I don’t know how much of the funding has arrived and how it is being spent, because we are right into the season already. Time is of the essence. We need to get the infrastructure back.”
Catastrophe fund
He said that ideally, the government needs to set up a catastrophe fund as a provision for any future disaster, so it can get back up and running more quickly, but added that it is not likely to be affordable unless it is budgeted and financed by the Netherlands or the World Bank. Security on the island is also vital.
“I think people endured more mental anguish afterwards than during the hurricane. We made the decision to pay businesses that got looted. Looting created a stigma and left a negative impression in people’s minds and undermines investor confidence.
“Government should find a way to assist the business community and the hotel industry, whether it’s by tax relief or other incentives, if the government can afford it. I foresee economic problems ahead. Most major hotels will not reopen until the 2019 season at the earliest. I say, use that time to rebuild business and investor confidence.”
He said he regrets that NAGICO’s vital role in the rebuilding of St. Maarten has somehow been under-appreciated. The company has already paid out $400 million between both sides of the island since Irma.
“I don’t think any other company will have paid close to a third of that,” he said.
NAGICO shares
Regarding the possibility of NAGICO selling the remaining 50 per cent of its shares to Peake Reinsurance, McSood said no decision has been taken on that yet, but it is an ongoing conversation. Peak Reinsurance Company Limited (Peak Re) is an international reinsurer with over US$1 billion of assets and majority owned by the Fosun Group, which has over US$12 billion in equity and in excess of US$50 billion of assets.
“It might happen next month or next year. It’s about what’s best for the company. What’s important is a financially stable organisation. But local management will always be there. That’s without a doubt. No reinsurer company gets involved in local insurance company management. And I will remain chairman with a strong local and regional management team,” he said.
“I think a share-holding change is actually beneficial to policy-holders, because financial security is important. You need to have the financial strength as financial demands get bigger. You will see the same people every day. But the difference will be in the balance sheet and the support.”
Finally, his message to the public is that NAGICO has always been there for the population for 36 years and will continue to be there.
“We’ve seen major hurricanes, volcanic eruptions and floods all over the Caribbean and looked after people and will continue to do so. In 2018, if it’s a category-one storm or a category-five, or no storm, we will take care of you as we have always done,” he said.
Source: The Daily Herald https://www.thedailyherald.sx/islands/77470-mcsood-ombudsman-should-be-used-more-in-insurance-disputes
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