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'Worrying' Growth In Uninsured Accidents

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Patrick Ward

* Insurer sees rise in drivers with no coverage

* But COVID causes 'noticeable' drop in claims

* 'Pushing' to finish Dorian payouts by year-end

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamas First's top executive yesterday revealed that COVID-19 restrictions have produced a "noticeable" drop in motor vehicle claims despite a "worrying" increase in uninsured driver accidents.

Patrick Ward, the BISX-listed property and casualty insurer's top underwriter, told Tribune Business that despite the overall decline in such payouts there had been a marked uptick in accidents involving drivers who lacked the proper coverage.

Suggesting this was at least partially due to the pandemic's impact on jobs and incomes, as well as negligence by owners when it come to letting others use their vehicles, Mr Ward said innocent victims were frequently being left with no recourse when it came to financing repairs to their cars and/or medical bills.

"It's quite a noticeable difference in the frequency of claims," Mr Ward told this newspaper, as Bahamas First unveiled its financial results for the nine months to end-September 2020. "We have less claims reported than would typically be the case for that period of time simply because there are less vehicles on the road."

The insurer, in its message to shareholders, said the fall-off had been "brought about by driving restrictions in response to the pandemic". Lockdowns and curfews, together with the tourism industry's closure and that of other businesses, and more staff working remotely from home, have all reduced the number of vehicles on New Providence's overcrowded streets.

While Mr Ward produced no figures for the decline in vehicle accident claims, he was quick to add: "One worrying concern is that even though that's the case, we've seen quite a number of accidents where the other party does not have insurance - either because coverage has expired or the driver is not covered under that particular policy.

"We've seen a bit of an uptick in the number of those cases in recent times. Unfortunately, there are people driving who are not covered or drivers who are not covered by the policy attached to that particular vehicle."

Mr Ward said he was unable to provide figures for the number of such accidents, or the level of increase, adding: "There's no benchmark. It's a little bit more anecdotal in the sense that we've seen such accidents coming up more regularly than they normally would.

"It's a concern for the insurance industry, but even more of a concern for the public. There's cases where persons have insured themselves fully with comprehensive coverage, so there will be a mechanism for recovery, but if you don't have an adequate amount of insurance to protect you, you are left on your own to recover from the wrongful party or have no recovery because that party is unable to pay."

Mr Ward said he suspected that the economic hardship inflicted by COVID-19, especially the soaring unemployment rate and loss of incomes, was partly responsible for the seeming increase in uninsured drivers. He added that it was "either a case where the funds are not available" to renew motor vehicle insurance "or people being less than prudent about how they allow their vehicles to be used".

In the latter case, Bahamian property and casualty insurers typically seek to limit their liability exposure by inserting "authorised driver" clauses into the policy contract. This restricts insurance coverage to a certain number of persons who are "authorised" to drive the said vehicle.

However, many Bahamian vehicle owners are either unaware or forget that such clauses apply. As a result, they either let family members or friends not included among the "authorised drivers" have the keys to their vehicle, while employers do similar with their employees. In both cases they expose themselves and other road users to potentially significant loss and hardship.

Bahamas First's results for the nine months to end-September, meanwhile, showed the benefit of not having to deal with the nine-figure claims produced by a Hurricane Dorian-strength storm. Mr Ward said the impact was "significant" even allowing for COVID-19, as the carrier enjoyed a $11.346m bottom line turnaround through $6.842m in profits compared to last year's $4.505m loss.

Alison Treco, Bahamas First's chair, said gross written premiums has shrugged off the pandemic's impact to post a minor 0.3 percent year-over-year increase, standing at $124.98m for the nine months to end-September 2020 despite the pressures imposed on corporate and individual clients by the virus.

"There was a small decrease in premiums in The Bahamas, which was offset by an increase in Cayman," Ms Treco wrote. "The loss of premiums in The Bahamas as a result of Hurricane Dorian and COVID-19 was offset by property rate increases, and the additional business generated by construction activity following Hurricane Dorian.

"It is evident that the balance of 2020 will continue to see restrictions on business operations in order to combat the spread of the virus, which will continue to have a negative impact on the economy."

Mr Ward said he was "slightly surprised but, when you think about it, not entirely shocked" that Bahamas First's premium income had held up under COVID-19's assault. Fresh memories of Hurricane Dorian's devastation had likely prompted many homeowners to ensure they remain covered, he added, while banks and other lenders with outstanding mortgages will also take steps to protect their security.

Some 97 percent of Dorian-related claims were said to have been settled as at end-September 2020, and Mr Ward said the underwriter was driving to settle the remaining ones by year-end. "There are just a few claims left. Typically the more complicated claims are the last to go," he explained.

"Our objective was to be done with them by now, but we're making a big push to get all those claims resolved by the end of the year. In all these cases we've made offers to settle the claims, so it's up to the client to negotiate directly or their representative to conclude these discussions."

Ms Treco, meanwhile, confirmed the value of Bahamas First's investment holdings had been hit with COVID-19's economic fall-out producing an unrealised $2.3m loss on these assets for 2020 to-date.

"To summarise the group’s financial performance over the three quarters to September 30, 2020, premiums have remained steady while claims saw a sharp decrease," she wrote. "Total other expenses for the year to date were slightly higher than last year by 2.7 percent. The leading factor contributing to this was the cost of conversion of reinsurance payments received in relation to Hurricane Dorian.

"As the pandemic lingers, we continue to face the economic hardships that come as a result of government-mandated restrictions and the curtailment of economic activity. Ultimately, this will present challenges to premium collection and has already adversely impacted our equity investments."

Comments

GodSpeed 4 months, 3 weeks ago

well when it's either pay for your electricity or pay your car insurance, people will probably take the risk.

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sheeprunner12 4 months, 3 weeks ago

The auto & insurance cartel grip on the "small man" has been broken ........ access to cheap small Japanese cars have liberated many "lower class" Bahamians ...... The Government is still fleecing the system with gas & RTD fees ........ meanwhile the overcrowded, chaotic streets is symptomatic of our lawless and selfish Bahamian society ........ Dorian & Covid19 have brought out the worst in many.

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tribanon 4 months, 3 weeks ago

Here we see Patrick Ward and Alison Treco shamelessly reveling in the windfall profits Bahamas First has reaped as a result of the very significant decline in auto insurance claims attributed to the many curfew and lockdown periods 'ordered' since February.

These greedy vultures are simply giddy about the huge profits Bahamas First has pocketed from the misfortune of its auto insurance customers who paid outrageously high premiums for the privilege of not being able to use their vehicles nearly as much as they ordinarily would have done due to the COVID-19 restrictions. The same is no doubt true of the other local auto insurers and their agents/brokers.

Given that the amount of time auto insurance underwriters estimate a vehicle will be driven is a key factor in determining the risk of claims, and therefore the level of premium to be charged, one must ask: How is it auto insurers like Bahamas First and their agents/brokers are not proposing to give most if not all of their customers a retroactive premium credit/reduction? Not providing such a premium adjustment is really tantamount to unjust enrichment at a time when most Bahamians are struggling daily to make ends meet. Where's the sense of justice here?! Even GEICO in every state of the US gave its auto insurance customers a 15% premium discount due to the fall off in auto usage caused by COVID-19.

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