FOREX CRISIS PUTS INSURANCE INDUSTRY IN TROUBLE

THE foreign exchange crisis is a major reason for the local insurance industry being in serious trouble.

The shortage and inequitable distribution of forex is making it difficult for insurance companies to pay international reinsurers.

The reinsurers are threatening to pull out of the Trinidad and Tobago market, and, in some instances, have imposed higher costs on the local firms.

Reinsurance is mandatory, according to the Insurance Act.

The forex crisis is worsening, with multinational energy corporations earning less and with the flight of foreign investors.

Arcelor-Mittal, which shut down its Point Lisas steel plant seven years ago, was T&T’s largest foreign exchange earner outside of the energy sector.

T&T had a net loss of $941 million from foreign investor companies in 2022.

Inflation and floods are other factors adversely affecting the industry.

The insurance industry is facing its worst time in decades, with the 51-year-old Beacon – said to be the fifth largest in the country – up for sale.

The company is reportedly seeking US $30 million, just over TT $200 million.

There are reports that several insurance firms, including Maritime, are downsizing.

A number of insurance agencies have shut down in recent years, in the process throwing several workers on the breadline.

The industry has also been impacted by the declining state of the national economy, which has led to business closures and reduced spending by workers living pay cheque to pay cheque.

The issuance of policies in all fields, including property and health, has fallen off.

The Association of Trinidad and Tobago Insurance Companies (ATTIC) said a couple of years ago that the sector was being adversely affected by a number of issues.

Health claims made by policyholders after the Covid-19 pandemic also hurt several companies.

The Insurance Act, introduced five years ago, has increased the capital requirement and operating costs of insurers.

In recent years, several insurance companies have compulsorily closed their doors.

They include Citizen, Goodwill, and Nationwide.

Other firms have closed parts of their operations.

American Life and General Insurance Company (ALGICO) pulled the plug on its general portfolio.

Clico, which was started in 1937, is not likely to survive the current liquidation process.

The company, whose founder was the legendary Cyril Duprey, was identified in 2009 as T&T’s largest insurance company.

There is also business consolidation in the sector, with the CG group acquiring Massy United.

TATIL is awaiting regulatory approval to acquire Colfire.

ATTIC previously advised insurance firms to ensure they could meet claim their obligations and remain viable.

The sector is now reporting lower growth than the national Gross Domestic Product, which had previously not taken place.

There were declines in all sub-sectors, especially in the health segment, a recent official report said.

The entire industry suffered falloffs in premiums.

The immediate future of the industry is “challenging,” a senior executive said.

“The sector has been hit by different industry problems and the macro-economics,” he stated, “and there is no indication that those issues are behind us.”

He acknowledged that other insurance companies could see trouble in staying alive.