Orville Johnson, executive director of the Insurance Association of Jamaica, at the JSE Investments and Capital Markets Conference in Montego Bay. Johnson was a panellist at the insurance workshop on Thursday.- Photos by Adrian Frater

Insurance companies are by no means insulated from the current global financial meltdown, but experts in the field are optimistic, even if cautiously so, that the sector could escape relatively unscathed.

Patrick Lawe, managing director of Lawe Insurance Brokers Limited, said insurance companies have had a history of surviving crises and predicted they would do the same again.

"While insurance companies are not foolproof, they are usually stronger than most financial companies," said Lawe, who was one of three panellists at an insurance workshop Thursday at the Jamaica Stock Exchange Investments and Capital Markets Conference in Montego Bay.

critical period

"In essence, our role is to bail out companies that are in trouble," Lawe said.

Orville Johnson, executive director of the Insurance Company of Jamaica, sees the next two years as being critical.

"I am confident that once insurance companies can hold out over the next 24 months, they will survive and prosper," said Johnson.

A day later, however, came the big announcement in Port-of-Spain that the Trinidad and Tobago Central Bank was taking over three insurance companies (see story on page C1) owned by the CLICO group.

Harvey Ennevor, president of the reputable United States (US) insurance brokerage EG Bowman Company, predicted challenging times, saying 2008 was the third-worst year on record for insurance companies because of the various catastrophic events in the US.

"Insurance companies' catastrophe losses in 2008 rose to about US$45 million, which doubles the 2007 levels," said Ennevor.

"Worldwide, the insurance industry, including life insurers, is expected to absorb one-fifth of the global losses from the financial crisis, based on projections made by the International Monetary Fund."

The dangers facing insurance, said Johnson, include inflation pushing costs higher, while revenues are flat, job cuts and unemployment and a skittish investment climate.

Lawe said the meltdown should be taken as a kind of warning by those why buy insurance to ensure their risks are adequately covered.

"Insurance companies are your financial backer of last resort," he said. "We will always be here for you."

Ennevor, a Jamaican, who is originally from Kingston, predicts that insurance companies will benefit from US President Barack Obama's US$825 billion stimulus package, which, he said, is designed to create a bailout route for some sectors.

"Companies working on highways, infrastructure, housing, schools and technology projects will all require insurance for their operations, plus workers' compensation, travel accident and health insurance," Ennevor said.

"The president hopes to create three to four million jobs and some of them will be in insurance, both as carriers and brokers."

underinsured market

The Insurance Association of Jamaica's Johnson, in assessing opportunities locally, said Jamaica was an under-insured market and that there were areas in which new business opportunities exist, including critical illness, retirement and education, and foreign-exchange denominated policies.

"I know we will survive; we always have," said Johnson, sounding the most upbeat of all the panellists.

"We are facing a major challenges because of the global situation, but I have no fear that we will get over it."

adrian.frater@gleanerjm.com

Patrick Lawe, managing director of Lawe Insurance Brokers Limited, at the JSE Investments and Capital Markets Conference in Montego Bay. Lawe was a panellist at the insurance workshop on Thursday