LETTER TO THE EDITOR
Somebody please help us help ourselves
Tuesday, March 29, 2005
Dear Sir,
This matter may have already had a great deal of media coverage but I would appreciate your adding my 2 cents worth or more appropriately “my $6,275” (Insurance premium) worth to it.
I have always had an issue with the cost of insurance in the Cayman Islands. Insurance cost would always increase in Cayman after a catastrophe in the USA, whether caused by nature or terrorists. In the aftermath of Ivan, Cayman was “hit” once again by a “Tsunami” which was caused by the Insurance Industry.
Prior to Ivan I used to enquire of residents of Florida about the cost of Home Owners insurance and was surprised to hear about their low premiums. However, whenever I attempted to discuss this with my own insurer, I was told the reasons were that:
- In Florida the coverage was different and for that premium they would not have the kind of coverage we were getting:
- That U.S. home owners paid a lower premium because they would opt for a higher deductible, up to 20 percent, in the event of a catastrophe.
I have since learnt differently that that is all “hogwash”, and I got it straight from the “horse’s mouth”. We recently purchased a home in Florida and I got quotes from 6 “A” rated insurance companies.
On a replacement value of $175,000
Personal possessions 87,500
(50% of value of home - an automatic feature)
Personal Liability 330,000
Loss of use 30,000
Medical 1,000
Plus several other features.
The deductible was $1,000 for perils other than a hurricane and 2% for hurricane damage.
(The insurance company determines whether you are in a flood area and if you are, the premium is slightly higher.)
For all of the above my premium was US$586.
Compared to my home in Cayman:
Replacement value CI$250,000
Personal possessions 50,000
(Plus similar cover for personal liability, loss of use, etc)
With 3 percent deductible in the event of a claim for hurricane.
A grand premium of CI$6,275.
Was Florida not hit by 4 (four) hurricanes in 2004, as well as acts of terrorism at one time or another?
Does our Government not realize that we are “working class people” and not all of us can afford to build homes for millions of dollars?
Yes! Cayman is an affluent country, but there are a great many of us who earn less than $50,000 p.a. The above premium is 12.5 percent of that annual income.
(Which would play a big part in the deciding factor for one to get a mortgage, when taking the debt servicing ratio into consideration).
Government had to assist many people after Hurricane Ivan but, God forbid, should the same thing happen again, we will be in a worse state. It should be taken into consideration that those who have always scraped to get insurance may not be able to afford it now. Those who have chosen in the past, not to have it, will find it completely out of reach now.
Somebody please help us help ourselves. Would it be better if instead of 50 insurance companies there were less to share in the market?
A. Banks
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