By Denis St. Bernard, Contributor 
St. Bernard
THE REGION has now placed a spotlight on the Jamaican insurance sector, to gauge its performance after FINSAC's intervention and a new regulatory framework instigated by the Financial Services Commission (FSC).
A positive nod will not only place Jamaica as a model for others to follow but more importantly will put the country in a very competitive position regionally and globally, thus adding an entirely new dimension to the prospect of opportunities and economic growth for the Jamaican insurance industry.
However, effective competition is a lot more than adequate regulation. Therefore the question is now being asked, "Can Jamaica effectively compete in the global market?"
When Sunday Business met up recently with Leslie Chung, chairman of the Jamaica Association of General Insurance Companies (JAGIC), he expressed great optimism about Jamaica's readiness to compete effectively with any of its regional partners in the area of products, service and technology, while quietly admitting that there will be challenges in the area of reinsurance rating issues and local capacity which are directly related to the current devaluation of the Jamaican dollar.
"We are very capable of handling ourselves, let's hope the CSME will give us the necessary access to get into the other regional markets to compete also," ended Mr. Chung.
REGIONAL PLAYERS
BEGIN GLOBAL EXPANSION
Guardian Holdings Limited, a major Caribbean financial services group with both life and general companies operating in Jamaica, recently announced the important general insurance acquisition of Link Underwriting Agency Limited ("Link") from Rubicon Corporation, U.K. Link is a Managing General Agent in the United Kingdom domestic Motor, Household and Accident and Health (A&H) markets, serving over 4,000 brokers and binder accounts with an estimated premium income for 2003 of 87 million pounds.
NEMWIL (part of the Guardian Holdings Group) has now streng-thened its presence in the UK retail market and establishes a strong base from which it can grow with Pan-European expansion.
Additionally the transaction is an excellent fit for the strategic objectives of the GHL Group providing the necessary vehicle for future expansion, risk and hard currency diversification. The total investment of the GHL Group in this venture is approximately 16 million pounds.
The CLICO Group, another (T&T) Financial Services Holding Company, has also made some inroads into the United States market, so too has Sagicor. Apart from Guardian Holdings and Sagicor, it's heartening to see a couple of local players beginning to see the potential of expanding and equipping themselves for opportunities, not only in the local market, but in the wider regional and global markets as well.
One such player is Globe Insurance Ltd., which recently acquired Jamaica General Insurance Company Ltd., now placing Globe among the top four general insurance companies in the island. Globe has also signalled its interest in regional expansion.
It is rumoured that billionaire Michael Lee Chin (NCB), also has his eyes on the insurance sector. Already NCB has transformed its OMNI Agency into a fully fledged life insurance company, a clear enough signal for the market.
TERRORIST ATTACKS
A number of leading international rating agencies and institutions have given Jamaica and the region moderate to negative reviews as far as economic growth and development is concerned. Many are of the view that the region has been struggling as a result of the terrorist attacks of September 11 and the subsequent U.S. economic downturn.
For the smaller island states that rely heavily on traditional agricultural exports and increasingly on tourism, the predictions are extremely gloomy.
Concern about the economic downturn appears to have concentrated the minds of Caribbean Community (CARICOM) leaders. They are moving to tighten agreements for greater union within the region, allowing for freer movement of people, capital, goods and services. Regional leaders also seem to be positively responding to the problems affecting regional air transport by investing and reviving the idea of a single Caribbean airline.
World Bank President James Wolfensohn recently called for more assistance in its efforts to encourage greater competition.
The tourism industry, which accounts for over 50 per cent of the Caribbean economy, was dealt severe blows by the effects of global economic uncertainties and heightened fear of air travel in the wake of the September 11, 2001 terrorist attacks.
OPPORTUNITIES FOR
INSURANCE SECTOR
Jamaica is strategically placed to access the larger emerging markets in the region e.g. Cuba and the Dominican Republic, with a joint population of over 20 million, seem particularly enticing.
At a recent CARICOM summit in Havana, Caribbean leaders said that they favoured a trade deal with Cuba and hinted at the country's eventual accession to the regional body. The secretary-general of CARICOM, Edwin Carrington, also suggested that the organisation could act as a bridge to help improve relations between the United States and Cuba.
With the last Insurance Association of the Caribbean (IAC) conference held a few weeks ago in the Dominican Republic, it is clear that it sees itself as fully entrenched in the Caribbean landscape and is looking eagerly to compete in the wider region.
As painful as the FINSAC fallout was and will continue to be for sometime to come, this should also be viewed as an opportunity. We have paid a very high price to learn, let's hope that we have learnt all our lessons very well, as these lessons and experiences will serve us well as we position ourselves to compete in the global marketplace.
Denis St. Bernard is a regional insurance and business consultant based in Jamaica. Feedback at pri@kasnet.com
