Regional reinsurance company proposed for Caribbean
Monday November 14 2011 | 06:52 AM

A top regional insurance official is advocating the establishment of a Caribbean reinsurance company, saying CARICOM nations can save millions of dollars in the process.

According to Randy Graham, president of the Association of the Insurance Institute of the Caribbean, the region is a net exporter of foreign exchange relating to monies used for reinsurance. 

That’s because all reinsurance companies serving the Caribbean are owned and operated by business people in Europe and North America, Graham said in a lecture in St. George’s

The lecture, titled “The Role of Reinsurance in the Caribbean,” was organized by the Association of Grenada Insurance Companies (AGIC).

“We make money as a region. The problem is we’ve been sending the money to the reinsurers,” said Graham, who is also president of the Insurance Institute of Barbados, and a lecturer in finance at the Cave Hill School of Business, University of the West Indies, Barbados.

The monthly Barnacle, in its November issue, quoted Graham as saying that some EC$812 million leaves the region annually as contributions to reinsurers based in other parts of the world.

Not only would a Caribbean reinsurance company save on foreign exchange, said Graham, but it would also allow for “better regulatory monitoring of reinsurance adequacy.”

Another benefit is “less administrative work and faster recovery periods by insurance companies from the insurers,” added Graham.

He expressed confidence that the region can have “an effective Caribbean reinsurance company.”

What would be required to set up the company, he said, is raising capital of about $10 billion.

Graham, according to Barnacle, suggested that the money could be collected through initiatives such as floating bonds; donations; insurance companies’ contributions; selling shares in the reinsurance company; and raising funds in the capital market.

“Reinsurance plays a huge role in the Caribbean,” Graham emphasized. “It provides additional sources of capital to pay claims.”

Without reinsurance, the probability of insurance companies’ bankruptcy also increases, he explained. 

The AGIC event also included the official launch of the Insurance Institute of Grenada (IIG), the first-ever local teaching facility for insurance industry employees.

“This evening is indeed a momentous occasion. It is special because it is groundbreaking for the insurance industry in Grenada, Carriacou and Petite Martinique,” said AGIC’s president, Molly Roberts.

Graham pledged “full support” for the IIG from the Association of the Insurance Institute of the Caribbean, saying the regional body plans on bringing about 60 members to Grenada next year for a conference that would run for up to four days.

Tourism Minister Peter David, who delivered a brief address to signal the launch of the IIG, said he is looking forward to the proposed regional insurance conference in Grenada in 2012.

He congratulated AGIC on setting up the IIG and praised Graham for his “insightful thoughts” and his “enlightened presentation.”

IIG president, Pearlie Charles, said the goals of the institute will include ensuring the professional standards of the insurance industry are “improved and maintained;” providing continued educational opportunities for people in the insurance business; and encouraging “greater cohesion and interaction” among industry members.

As a whole, training increases employees’ productivity and companies with “strong learning cultures” have higher customer satisfaction and are more profitable,” said Charles, a St George’s University graduate who specializes in human resource.