November 25, 2020

The Editor Speaks : Insurance

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It doesn’t matter what type of insurance premiums you pay for, e.g. motor, life, property, health, they are high and they go on rising. No matter what the insurance companies claim how they are there for you, they are in business for one reason only – to make a profit.

I am not decrying that. We are all in business to try and make a profit. Some succeed but even more don’t. However, the margin of profit most insurance companies aim to make and did make was staggering. We were talking of billions of dollars every year but those hazy days of summer are gone, especially when it comes to health and property.

Property insurance is staggeringly high. These companies caught a very big cold here after Hurricane Ivan hit. Some didn’t even survive the cold. They died. The rest licked their wounds. They had taken their profits over the years of calm and spent it. They did not keep it safe for that rainy day. None of them remembered Joseph. Even though we live in the Cayman Islands and we have had thankfully a reasonably quiet time since, except for Hurricane Paloma that hit the Brac, don’t imagine for one moment our premiums are going to remain at this year’s level or cost less. Nah. I’m sure that never crossed your mind. Immediately after Ivan our premiums here shot up and we were expecting it. I’ve got news for you. Next year’s premiums are going to rocket up as well.

USA has been hit with more and more storms and the predictions are for it to get worse with global warming being cited as the biggest contributing factor; with USA, along with China and India, being one of the worst offenders. Not looking behind the picture they don’t want to go to other energy fields because of the cost so they will still continue to pollute and who cares about the rest of the world. Now Canada has opted out of agreeing to a second Kyoto Protocol. But it does cost. Someone has to pay for the damage the severe weather causes. This year Hurricane Ivan made it’s own history by becoming the first hurricane to hit the east coast of the USA in three years and could be the catalyst the insurance industry has been seeking in its quest for across-the-board premium increases after years of weakness. A friend, who works in our local insurance industry, warned me the other day that the Caribbean has now been added in with the USA and any rise there will mean a rise here! Insurers there have lost a staggering $90 billion in the first three quarters of this year!

Life insurance is generally fairly cheap in comparison to the rest. That is, until you reach retirement age. We are all going to die. The only question is when. Our friendly insurance companies only want young people. They do not want to pay out. So you start your premiums at a reasonably affordable figure and when you reach ‘that time’ when Grandfather Death is lurking around the corner with his scythe, your premiums soar. So much so your insurance company hopes you drop out of their carefully loaded risk factored plan.

Motor insurance is probably the only one that stays fairly constant. It keeps up with inflation and the premiums are loaded at the beginning when you are inexperienced and at the end when you are old. Of course, the more accidents you have the higher the premiums. That’s business.

And last but not least health insurance. The rates here are, in the words of former health minister and now radio host Gilbert McLean, “astronomical.” Even so, there are very few health providers and most will only provide group coverage. Individual coverage is provided only by Guardian General (Fidelity) and BAF, and CINICO (Cayman Islands National Insurance Company) – which cover civil servants, seafarers, veterans, indigents and those who are considered uninsurable. “How logical is it to have a law that says every man, woman and child must have health insurance and the government does not make it mandatory that companies provide it?” Mr. McLean asked. Why are the premiums so high? Doctors, hospitals, drug companies and us. Yes you and me. Health-insurance premiums have grown faster than inflation or workers’ earnings over the past decade, in parallel with the equally rapid rise in overall health costs.

Doctors and hospitals earn more money by executing costly interventions than by keeping people healthy. In the USA the cost of administrative and marketing, plus profits, consumes 12 percent of private-insurance premiums. There are no statistics available here but I cannot believe it is less. Drug spending by us has increased dramatically. We eat too much and we exercise too little. We drink more alcohol and we still smoke.

We don’t have the malpractice insurance premiums and liability awards that are common place in the USA and although the majority of USA citizens think that is the major cause of their high premiums it only accounts for 2% of overall health-care spending according to ConsumerReports.org.

Whatever any Government tries to do in regulating, forcing insurance companies to offer policies, especially to the elderly, very little will work. Yes, they may provide coverage but at what price?

I know of a number of people who have not been able to pay their property insurance since Ivan. I know of many people who don’t have health insurance because of the costs and finding a provider. I know of many more in my age bracket who cannot afford life insurance. Most of us can find motor insurance and that’s because we have to.

Insurance companies MUST make a profit. That is the ONLY reason they are in business. They are not the fairy Godmother, especially if you are in their high risk gr

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