The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamian insurers yesterday warned they and the Government are rapidly running out of time to resolve the “confusion” and uncertainty surrounding implementation of the new Road Traffic Act reforms.

Industry executives told Tribune Business there are “some administrative headaches” over how the legislative changes passed by Parliament earlier this year will be enacted in practice. They asserted that these issues must be addressed before the amendments take effect on January 1, 2025 - a deadline that is just six to seven weeks away.

Describing some of the reforms as “a heavy burden”, as they effectively make Bahamian property and casualty insurers responsible for policing uninsured drivers, they explained that among the unresolved issues is how to align clients with the Act’s new requirement that they renew coverage during their birth month.

This, from the Government’s perspective, is designed to ensure insurance policy renewals occur in the same month as persons licence their vehicle. This will act as another check by, in theory, forcing all drivers to ensure they have coverage otherwise their autos will not be licensed by the Road Traffic Department.

However, at present auto insurance policies are “all over the place” when it comes to being aligned with a driver’s birth month. And, while some clients may only require a two-three month extension to take coverage to the relevant month, insurance executives yesterday said this would potentially breach the Road Traffic (Amendment) Act 2024’s stipulation that policies must remain in force for a minimum six months.

This was identified as just one of the issues that needs to be resolved in the Government’s bid to crack down on the estimated 30-40 percent of Bahamian drivers who either lack, or possess inadequate, auto insurance coverage with the Royal Bahamas Police Force (RBPF) asserting that 50 percent of all traffic accidents involve uninsured vehicles. 

Bruce Ferguson, president of Professional Insurance Consultants (PIC), told Tribune Business that brokers and agents such as himself are all waiting for “mandates” from the underwriters on whose behalf they issue policies - the likes of Bahamas First, RoyalStar Assurance and Security & General - over how to implement the Road Traffic Act reforms.

“It’s all rather unclear. It’s so confusing,” he disclosed. “We’re really awaiting confirmation from the insurers as to how we should handle the various changes. One of the biggest changes is people having to insure in the month of their birthday.

“We’ve only got another six weeks before it comes into force. The biggest concern for clients is that many like to stagger their payments throughout the year; they don’t like all their bills to fall into one month. They will now have to licence their vehicle in the month of their birthday, and insure it as well. 

“It puts a big burden on people. A big concern is a lot of people will not have the money and will go uninsured. The Road Traffic Act is now saying there should be no insurance policy unless it’s intact for at least six months, but that begs the question who’s issuing six-month policies as that’s not the done thing in The Bahamas. We don’t issue any six-month policies; that’s only done in certain US states.”

Mr Ferguson said PIC has several clients who have already sought to renew their policies for just a few months to align with their birthday so as to get ahead of the reforms taking effect. “We’ve had clients already coming in and chopping and changing regarding renewal dates, and they’re only going to renew this to that month as that’s their birthday,” he added.

“That’s fair enough, but you may be jumping the gun because we don’t know how this is going to work in practice... The problem is that there hasn’t been a lot of dialogue and agreement between the industry and the Road Traffic Department. There’s been a couple of meetings, but I don’t think anything’s been decided. Suddenly the Act’s in place. What’s the position with all of that?

“It has been suggested that there may be some alterations, but that hasn’t happened yet. One can imagine there will be no differences come January 1. We have to meet that and assume it will be the law. We’re still waiting for insurers to to direct us on how we should handle certain aspects. That’s where we stand on the broker side.”

A senior insurance industry executive, speaking on condition of anonymity, said they understood that the Bahamas Insurance Association (BIA), the industry body, was in talks with the relevant government agencies such as the Ministry of Energy and Transport and Road Traffic Department to determine how implementation of the reforms will be handled.

“There are some quite complex issues in administering the legislation,” they said. “They’re in discussions to go through all the details. It’s going to create some administrative headaches that need to be addressed.”

The source identified the minimum six-month coverage requirement, and stipulation that policies be renewed in a person’s birth month, as especially challenging given that renewal dates are currently “all over the place” and not aligned with birthdays and vehicle licensing.

“All those policies fall due at different times,” the source said. “They’re going to have to extend the policies but they’re making you have a minimum six months of coverage. Some people extending their policies to their birthday won’t comply with the minimum six months’ coverage. They may only have to extend for three to four months. There are administrative issues involved with it.

“It’s quite a heavy burden on the insurance industry. They are putting the onus on the insurance industry to administer it. It’s quite tight, and the penalties are very onerous. There’s a lot of administrative issues, and the cancellation and collection of certificates and making sure Road Traffic is advised.

“It puts a lot more burden on the industry to comply with the legislation. We’ll go along with it, but it needs to be practical. It’s very tight.” The reforms mandate that an auto insurance policy can only be cancelled “within six months” of being issued if the subject vehicle is no longer roadworthy or has been sold to another person. 

“A policy of insurance shall be renewable annually within the birth month of the insured person,” the Road Traffic (Amendment) Act 2024 stipulates. The “policy of insurance” definition includes a 90-day cover note, but this cannot be extended and no other ‘cover note’ can be obtained for the same vehicle for six months.

Persons cancelling their insurance must surrender the certificate to the insurer, with the latter having just 48 hours to inform the Road Traffic Controller of this and provide all relevant details on the client involved as well as the reasons for the cancellations. Failure to do so could result in the insurer being fined up to $5,000.