Economist Clyde Mascoll has advised the local insurance industry to be innovative since the immediate future is going to be extremely challenging for financial advisors. Speaking yesterday at the Barbados Association of Insurance and Financial Advisors’ (BARAIFA) 37th annual awards ceremony at the Lloyd Erskine Sandiford Centre, he said insurance companies should create products which “see the future as more optimistic than the present”.“Even though it is not explicitly stated, it is self-evident that the performance of the industry is somewhat correlated to the state of the economy and we are in an economic recession that is not likely to turn around before the end of 2011,” Mascoll said. He suggested that an innovative viewpoint will prevent the industry from offering high interest yielding products and plans that could not be realised.“Instead, a sensible investment product that starts with a low interest rate and anticipates a rising interest rate regime in the medium term seems rather more realistic,” Mascoll said.Economic growthThe former Government minister noted that although the recession would officially be declared over after two consecutive quarters of economic growth, this meant very little to the average man.“It is the disposable income of the individual that allows him to make an investment in a product or plan and so when the economy records two quarters of consecutive growth, it does not translate into increased spending power for the average worker,” he stated.  Mascoll said that while the unemployment rate had not yet soared because of some degree of corporate responsibility being practised by the private sector, several workers were earning less because of shorter work hours and this would add to the “reputational damage” with which financial advisors were being confronted.Mortgage demandsHe added that the industry as a whole would need to be stimulated through Government policy, which might come indirectly via initiatives to spur the demand for mortgages and loans.“Further measures to encourage investment in corporate shares may assist in driving the industry and the level of indebtedness of Government would surely provide opportunities for more investment in Government bonds and debentures,” he said. (NB)
