The Tribune

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

Life insurance claim payouts are expected to top the $300m mark for 2019, the Bahamas Insurance Association’s (BIA) deputy chairman said yesterday.

Sandy Morley, speaking at the opening of Insurance Month, said: “I would just take a minute to highlight what is happening on the life and health side. On that side of the business, we have combined assets based on the Insurance Commission’s website in excess of $1.9bn. In 2018, the industry collectively paid $298m in claims and I expect in 2019 that number will be in excess of $300m.

“Additionally, collectively we paid in excess of $13m in premium taxes. Undoubtedly, with our partners on the general insurance side, the insurance industry has a major impact on the economy both now and will continue to do so in the years to come.”

Anton Sealey, the BIA’s interim chairman, reaffirmed that total Hurricane Dorian claims payouts will exceed $1.5bn and could be “as high as $2bn by the end of the day”.

While unable to pinpoint how many claims had been settled to-date, he added: “I would venture to say that as an industry we are well north of 50 percent of having most claims settled.”

Mr Sealey confirmed that the insurance industry’s long-running VAT dispute with the Department of Inland Revenue had been “settled in principle”, but added: “There are still some i’s to be dotted and some t’s to cross before we can say it is completely settled. But in principle it has been settled and we are very pleased with that outcome.”

Without going into the settlement details, he added: “We have agreed that the terms and amounts that are to be paid. It’s just a question to getting the document completely signed off on, but in principle it has been agreed upon.”

The quarrel stemmed from whether general insurance underwriters could recover VAT on all or only some claims that were settled on a cash basis.

While the insurance industry felt it had achieved “a clear understanding” with the former Christie administration that VAT was recoverable on all such claims, its successor adopted the position that this was only the case where the insured client was a VAT registrant - meaning a business with a turnover greater than $100,000 per annum.

As a result, Bahamian property and casualty insurers faced being unable to recover “the VAT portion” of any Hurricane Matthew-related claims (and now Dorian claims) paid out to residential homeowners and other non-VAT registrants.

Given the $400m in insured damage inflicted by that storm, this left the industry facing a massive, unexpected multi-million dollar financial burden, and would have exposed it to an even greater liability as a result of Dorian had there been no resolution.

Mr Morley, meanwhile, was asked about the existing death certificate laws and whether that was impacting post-Dorian claims involving persons still missing following the category five storm.

“I think the provisions in the existing laws are for seven years to produce a death certificate. Those laws have not been changed, and recently there have been discussions and some channels open to having some amendments done to allow for this to happen sooner. But as for the industry we continue to be directed by the existing law,” he explained.