Barbados’ Insurance Industry is paying out millions of dollars annually in motor vehicle claims as road accidents continue to increase, a situation that officials say is being worsened by careless driving, distracted motorists, mounting repair costs and the growing challenge of uninsured drivers involved in collisions.
Claims manager at Co-operators General Insurance, Michael Holder, has warned that unless the trend is reversed, insurers may have little choice but to increase premiums to offset rising claims costs.
Speaking at Co-operators General’s hurricane preparedness promotion at the Patrick E. McDonald Building, Upper Collymore Rock, St Michael, yesterday, he said insurance companies were facing significant financial pressure as claims costs had now exceeded premium income across the industry.
“What I can say is that for every $100 in premiums being collected, the last industry figures I saw indicated that approximately $112 was being paid out in claims. Essentially, the industry was paying out more than it was taking in.
“That means there is no profit being generated from motor insurance under those circumstances. For any business to remain viable, it must be able to operate sustainably and that is one of the reasons why premiums have had to increase over time.”
While he did not provide specific industry-wide figures, Holder said insurers had paid out millions of dollars in claims over recent years.
“We are seeing increasing claims payouts, not only because of vehicle repairs and write-offs but also because of the rising costs associated with personal injury claims.
“When someone is injured in an accident and pursues legal action, those costs can be significant. Add to that vehicle rental expenses while cars are being repaired and the overall claims bill continues to rise.”
Holder added that when they took “a deep dive” into the accidents and their causes, many were occurring as a result of inattentiveness and a lack of patience by drivers.
“We are seeing a lot of accidents where somebody is exiting a side road and collides with a vehicle travelling on the main road. We are seeing collisions caused by improper overtaking and other risky driving practices.
“What that tells us is that there is a degree of impatience and inattentiveness on our roads that is contributing significantly to these incidents,” he added.
He noted that distracted driving, particularly the use of cellphones behind the wheel, was becoming an increasingly common factor in accident reports.
The insurance executive also said the cost of settling claims had risen dramatically in recent years, not only because of the frequency of accidents but also due to difficulties sourcing replacement vehicle parts.
“One of the challenges facing the industry is the availability of parts. We recognise that this is not just an issue for grey market vehicles or vehicles that were not imported through dealerships. It is affecting virtually all vehicles.
“In some instances, we are being told that parts can take three to four months to arrive and that delay comes with a cost. When you combine the increasing number of accidents with rising repair costs, rental vehicle expenses and personal injury claims, it creates a significant financial burden on the industry,” Holder said.
“If these costs continue to increase over time, then inevitably companies may have no choice but to increase premiums for customers.”
Holder also addressed growing public concern about the Barbados Police Service’s policy of not responding to minor traffic accidents due to limited resources. He acknowledged that the absence of police officers at many collision scenes was creating complications for insurance companies and law-abiding motorists.
“We are seeing situations where accidents occur and, unfortunately, the person who is at fault does not have insurance. In some cases, we have even encountered situations where individuals provide a name and address after an accident and when we attempt to contact them, the correspondence is returned because they have provided false information. It does not happen in every case, but it is something that we are seeing,” he said.
Holder noted police indicated their resources did not permit them to attend every accident scene unless there was a fatality, serious injury or major traffic obstruction.
“As a result, there are individuals who are driving without insurance and in some cases, without a driver’s licence, who appear to be getting away with it because there is no immediate verification taking place at the scene.” (TRY)
