The Insurance Corner – Risky Business

27.FEB.09

by the Insurance Brokers

REALITY CHECK

Recent events on our own doorstep have made us think hard. Insurance has been in the headlines, and many persons are asking, talking, worrying etc. Here are some ways to help ourselves to make good decisions and choices.{{more}}

PREMIUM

Can you afford it?

Is it a fair price?

How do you know? Do you have price comparisons?

Did you give complete information before that Premium was quoted?

Do you have to pay all the Premium up-front?

Could your Bank pay it for you, and you repay them Monthly?

COVERAGE

Insurance isn’t a baseball cap. One size doesn’t fit all. Coverage is not identical from each insurance company. Do you know what the differences are?

– It could be in the Risks covered (or NOT covered?)

– It could be in the Excesses or Deductibles for which you are not covered

– It could be in the different Limits of Liability cover offered by different insurers.

– It could be in the Special Clauses and Conditions applied by different insurers.

Do you know what Questions to ask? Do you know anyone who does know what to ask?

Are you getting the cover that YOU need? Does it fit you like the clothes you buy?

Ask, and keep asking, until you are satisfied with clear, definite answers.

STRENGTH AND SECURITY

What a shock recently! Many are asking if their insurance companies will still be there…

– How strong is the insurance company? How do you know?

– Have you seen their Accounts? Can you understand their Accounts?

– Do they have an “Excellent” rating from Standard & Poor’s? Moody’s?

– Where does your money go? Does it stay in SVG? How is it invested?

– Is it transferred overseas? To where? Is it invested overseas? Where?

– Is that company cautious and careful with your money? Are their investments risky?

Good, strong Reinsurance is essential, but this is bought to protect the insurance company against severe claims costs. It does not directly protect you. If YOUR insurance company collapses, you can’t claim against the reinsurers. It is only your insurance company (which has a contract with them) that can do that.

ATTITUDE

Jesus said: “Who do people say that I am?” In the same way, you can ask questions:

– What do people say about this (or that) insurance provider?

– What kind of service do they give?

– Are they a local Company? An Agency? A Branch? Where are decisions made?

– Do they settle claims fairly? Quickly? Do they drag-out settlements?

– Do people take them to court? Do they go to Court?

– Are they helpful? Do they try to see where you’re coming from?

– Do they seem Positive? Negative? Rigid? Flexible?

WHAT DO YOU DO WITH ALL THESE ANSWERS?.

Here are your choices in the local insurance market. Jump into the driving seat!

Local Insurance Companies

There are several of these, and they are locally-owned, sometimes with overseas partners.

They buy reinsurance overseas, usually via international Reinsurance brokers. So, decisions are made locally, but sometimes in consultation with reinsurers overseas.

Branches

A small number of Regional insurance companies have set-up Branches here. Their staff members are actually Employees of the insurance company. Some decisions are made here, and major decisions are made at the Head Office. Some employees might also be registered as Sales Representatives, and earn commission on insurances sold.

Agencies

Locally-owned Agencies are set-up to represent insurance companies. They are able to promote their own name and/or the insurance company’s name. The Agent or Agency has a legal responsibility to protect and promote the interests of their insurance company. They are not allowed to portray themselves as an actual insurance company. Agents and Agencies earn commission on sales, and sometimes on profits earned.

Sales Representatives

These are Individuals who are registered with our Ministry of Finance to sell insurance on commission, on behalf of an insurance company or agency. The Ministry is entitled to establish Examinations for sales representatives, and this is a future possibility.

Insurance Brokers

These are professional independent specialists who provide free consultancy services to the public. If you ask them to arrange an insurance, they are entitled to receive commission from the insurance company you choose. They are legally obligated to give you “Best Advice” and they are required to have Malpractice insurance against negligence. They should be able to give you honest advice on any aspect of insurance or risk management.

INSURANCE versus INVESTMENT

Insurance is a Risk Transfer. You pay a known amount (the Premium) in order to protect yourself against an UNknown cost. This could be repairs to your damaged house or business, or your car, or medical bills, or even funeral costs.

If your insurance company collapses, you might lose your premium.

You might also lose your compensation, if the insured event has already happened.

Unless a Disaster strikes, though, most of us would lose only the last premium we paid.

Investments are ALWAYS a risk. The higher the promised profit, the higher the risk. Unlike paying an insurance premium (and then losing it), an Investment means putting your savings up-front, and risking losing everything.

In both cases, care is needed, and you MUST ask Questions and demand straight, simple answers. Investments carry greater risk, so take greater care, and don’t risk what you can’t afford to lose. Usually it’s best to trust your instincts. If it will make you nervous, then perhaps it’s not worth risking. There may be alternatives that don’t make you feel anxious.