The struggle continues for insurance companies

Impacted by the slowdown in T&T’s economy, the insurance industry still continues to struggle to stay afloat. Chip Sa Gomes, Managing Director, ANSA Merchant Bank Limited said most insurance companies have two sides to their business and the slowdown has made it challenging to manage both the underwriting risk aspect of the business as well as the investment aspect of it. ANSA Merchant Bank Limited is a publicly traded company comprising of the ANSA Finance and Merchant, Tatil and Tatil Life Insurance Company Limited. Sa Gomes was speaking to Business Guardian last week Wednesday after the Annual Meeting which was held at the Tatil building, Port-of-Spain. When premiums are received they are invested until a claim is made by the insurer. Sa Gomes said: “It has been a challenge and we have had the same challenge in our business to find high-yielding investments that are of suitable investment quality.”

 

 

“One of the drains on the fortunes of an insurance company would be how many claims they have to pay out. In our general company we have been managing our claims costs quite ‘stringently’ and in 2010, the claims costs came down in 2011 as well, so when the economy is not being ‘gracious’ or ‘bouyant’ in certain things you have to look within the business to try to cut expenses and make sure that you maintain the bottom line, try to take market share from other competitors,” he said.

Paying claims is a must for any insurance company if claims are not paid it means the insurance company would not be in business for a very long. Overall, the insurance industry has “been more or less stable.”  “We are very fortunate in T&T, in that we have not had any catastrophic nature events,(earthquakes and floods) in the absence of things like that I think the business would be more systemic.  “There is the problem of crime that impacts insurance significantly, but I don’t think that the business has been volatile.The exit of Clico from the market, has been quite orderly and that has come through the strong intervention and the frequent statements made by the regulators. The uncertainty was minimised so there was no real panic. The regulators and the Government dealt with the transition, the pre and the post period,” Sa Gomes said.

 

 

He added: “From our perspective we have a fairly large concentration in motor vehicle insurance, based on our synergies with some of our group companies, it is an area that is focused for us and it remains strong and growing.  “I wouldn’t say there have been any significant occurrencies as we try to diversify our way from a very strong concentration on motor vehicles. I can’t say any one particular (aspect of insurance) outshone another, our core area did well for us and we are diversifying into other areas as well,” he said. What strategy can be adopted when there is a slowdown” “When you have a slowdown and when you have periods of volatility then it forces businesses to be more prudent and more efficient what happens is that those that are not prudent and efficient, would fall off, and those that are more or better capitalised, better managed and pursue better strategies survive the challenging times. 

 

 

“Even in times of plenty, businesses that are not prudent and wise in their strategies would not survive for the long-term. Sa Gomes said one of the changes which the bank made for 2012 was to liquidate its foreign investments. “The funds that we had invested abroad, invested in a balance portfolio, fixed income equities, structured products, after the first quarter run up of the markets, in consultation with our foreign managers, we decided to start liquidiating those securities to cash because we found it had appreciated a lot and we were trying to avoid any volatility or declines,” he said.