The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A well-known agent for Netherlands Antilles General Insurance Company (NAGICO) has hit back at claims that its ‘20 per cent or greater’ price undercutting threatens to destabilise the market, arguing it will benefit Bahamian consumers and smash an industry “oligarchy”.

Ethric Bowe, principal at AFS Insurance Brokers and Agents, which is among those writing business for the Bahamian market newcomer, told Tribune Business that the “fierce competition” provided by NAGICO would force established property and casualty insurers to both lower their premium prices and improve operations.

Pointing to the $300 annual premium saving he had generated for one Dignity Gardens homeowner, through issuing him with a NAGICO policy, Mr Bowe also dismissed concerns over whether the underwriter would be able to maintain reinsurance support if it continued ‘undercutting’ prevailing market rates.

He described NAGICO as “the strongest company in the country right now”, and suggested it was hypocritical of Bahamas First to rail against the arrival of an aggressive foreign newcomer, given that it had done the same thing in 2010 by expanding to the Cayman Islands.

Mr Bowe contacted Tribune Business after Patrick Ward, Bahamas First’s president and chief executive, expressed concern to this newspaper that NAGICO’s moves to steal market share, through offering Bahamian businesses and homeowners reduced premium prices, threatened to “destabilise” the property and casualty market.

Dismissing this, Mr Bowe criticised Bahamas First Holdings’ (BFH) group structure on the grounds that it was both underwriter and “retailer”. Apart from having Bahamas First General Insurance as the policy carrier, BFH also owns Nassau Underwriters (NUA) as its 100 per cent, wholly-owned tied agent, providing the group with its own sales/distribution channel.

Mr Bowe suggested that “anywhere else, this would be viewed as a restraint of trade. It’s not good for opportunity, choice or the consumer. Bahamas First have been running an oligarchy around here”.

The Bahamian property and casualty market consists of five locally-based underwriters. Apart from Bahamas First, there is RoyalStar Assurance, Security & General, Insurance Company of the Bahamas and Summit Insurance Company. The latter two are effectively ‘tied carriers’ through which J. S. Johnson and Insurance Management, respectively, place their general insurance business.

This left the former three, at least until NAGICO’s arrival, as the main choices for independent Bahamian agents and brokers when it came to deciding who to place clients’ business with.

“NAGICO is bringing in fierce competition, which is good for the consumer,” Mr Bowe told Tribune Business.

Referring to the broker who had told this newspaper that Bahamas First informed him he could match a NAGICO quote on a $40,000 premium, the AFS principal, in a message to that client, said: “Bahamas First would have charged you that high rate you were charged before.

“Whether you go with NAGICO or not, it’s saving you because of its presence...... I’ve got quotes on Dignity Gardens. I’ve been able to save a customer $300 on a home. That made me happy, the customer is elated and you’re talking about a government home.

“If we can save 1,000 homeowners some $300 each, do you know how much money is kept in the country longer? This is wonderful for us, and it will force the other companies to lower their prices. No more business as usual.

“Prices are going up, and the average salary of the working person is going up slightly, if at all. This is one area where people can get some relief, and in this environment that’s a good thing.”

Bahamas First and others have pointed out that unlike it, and RoyalStar, which are both rated ‘A-’, NAGICO has just a ‘B’ rating from A. M. Best, the international insurance rating agency.

But, in response, Mr Bowe told Tribune Business: “NAGICO, if you look at their financials, they are the strongest company financially in the country right now. They have a very strong financial base. They came here to make a difference, and we welcome them.”

Suggesting that people had to “examine what that [the A. M. Best ratings] really means”, he added: “From what I’ve seen, from what I’ve read, it’s [NAGICO] an excellent company.

“They’ve been able to manage their insurance business in areas, countries where you have lots of insurance claims, and have been able to keep growing and growing.

“I believe in competition; I don’t believe in oligarchies. They said: ‘We can do business with you, because we believe in the same things’. They proposed a contract, we looked at it, made some changes and it seems OK.”

As for concerns that NAGICO was a foreign company, Mr Bowe pointed out that what was ‘sauce for the goose is also sauce for the gander’. “In the Cayman Islands, Bahamas First is a foreign company,” he told Tribune Business.

“If we want to play on other people’s territories, we have to be prepared for other people to play on our territory. Bahamas First is concerned about competition, and rightly so, because they’re not operating at the level they ought to.

“I really believe in Bahamians first. But I don’t believe in Bahamians exclusively, and Bahamians to the detriment of other Bahamians,” Mr Bowe added, pointing to tariffs on imported chicken as an example of his philosophy.

“Competition is what is good, and these guys mean more competition. More competition will force quality improvements and reduced prices. That’s good for the economy, the country and creates more jobs. I love it,” he said.