Minister in the Ministry of Finance Ryan Straughn has called for regional collaboration in the insurance sector to help build resilience against external and climate-related events.
Speaking during the Caribbean Association of Insurance & Financial Advisors (CARAIFA) 36th Annual Sales Congress yesterday at Wyndham Grand Barbados Sam Lord’s Castle, St Philip, he said there was about US$50 billion in savings across the region not being deployed effectively.
In order to build greater financial, economic and climate resilience, Straughn called for regional risk pooling.
“In the context of a rapidly evolving external environment, it becomes even more critical that the hard-earned money that our citizens across the region work so hard to earn, that money must now be deployed effectively to be able to earn a rate of return that is not dissimilar to that of what we see perhaps in North America and Europe. But the only way we’re going to do that is if we do that collectively,” he said.
Regional risk pooling is known as a collaborative financial mechanism which will allow countries to pool and diversify their risks from disasters.
Speaking to insurance advisors and stakeholders, the minister said they were effective agents for mobilising capital across the region and educating on the need for patient and responsible investment.
He cautioned that there was a prevailing distrust in the insurance industry, rooted in past experiences and crises.
“People still have a distrust of insurance, generally speaking, whether it’s life or general insurance. We need to work harder – Government, you the stakeholders, the industry – to be able to demonstrate why it is important to have coverage of whatever form that people can rely on. That they know that it will be there, such that the trust and confidence in the wider system can be improved,” he added.
Straughn identified financial literacy as the most pressing battle in the region, and that closing the financial
literacy gap was the most significant intervention to strengthen regional economies.
To this end, he proposed a system which will ensure every Caribbean citizen can have access to life insurance as a basic right. This will be based on a small contribution to a pooled insurance fund and ensure a basic life insurance payout in case of death, he added.
“We now have to think about how do we create that system. If people do not believe that insurance can deliver for them and their families, they will continue to make different decisions about the deployment of the money that they earn,” he said.
He spoke of Government’s efforts to ensure a flexible regulatory framework to enable faster response in getting things done, which also called for a change to the way data is acquired, shared and protected.
“Whilst we want to be able to do things more flexibly, in a world where data moves quickly, we must ensure that with the increasing concerns related to fraud, which are on the horizon, that you, as the independent advisors, play a critical role in helping regulators, as well as policymakers, to be able to change and update information as required, but you stand in the breach to be able to validate whether a claim is legitimate or not.” (JRN)
