Insurance losses rise and sector to be investigated

Attorney General Samuel
Bulgin

Wednesday,  December 8, 2004

The Cayman Islands Monetary Authority (CIMA) announced last week that estimated losses to the domestic insurance industry, as a result of Hurricane Ivan, have surpassed the CI$800 million mark. 

Based on claims reported to insurers to date, property liabilities amount to approximately CI$766 million with CI$133 million having been paid. Of the CI$39 million in motor liabilities, more than CI$24 million has already been settled. Marine liabilities are estimated at CI$414,000 and so far CI$9,000 has been paid.

CIMA said that insurers hope to settle the majority of claims by the end of the year, with a view to settling the remainder within the first quarter of 2005. 

As the organization responsible for regulating the sector, Cabinet has asked CIMA to investigate claims of unfair insurer practices, in the wake of Ivan.

“Government has maintained an open mind about the allegations,” said Attorney General Samuel Bulgin. “Nevertheless, in the absence of consumer protection legislation, we are duty bound to investigate these claims.”

As a prelude to the Cabinet decision, the Cayman Islands Recovery Operation (CIRO) had several internal discussions focusing on public concerns. These appeared to be so widespread that CIRO raised the matter at Cabinet level.

Among issues discussed by CIRO were public complaints of the industry’s adoption of across-the-board dollar figures per square-foot in assessing replacement value of homes. The claims are that adjusters of some insurance companies are applying this rate indiscriminately, resulting in a seemingly widespread assessment that homeowners are underinsured. 

Other complaints surround the actual damage assessment, while some people allege that there is undue dragging of feet in settling claims.

Of particular concern to Cabinet is the report that some vehicle insurers may be deducting the reduction in duty on replacement cars from the settlement on damaged cars. “If that is so, it is untenable,” said Mr Bulgin, who however, reiterated that the government and the public should continue to maintain an open mind until all the facts were in.

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