Barbados Insurance Industry Faces Rising Motor Vehicle Claims

Barbados’ Insurance Industry is paying out millions of dollars annually in motor vehicle claims as road accidents continue to increase, a situation that officials say is being worsened by careless driving, distracted motorists, mounting repair costs and the growing challenge of uninsured drivers involved in collisions.

Claims manager at Co-operators General Insurance, Michael Holder, has warned that unless the trend is reversed, insurers may have little choice but to increase premiums to offset rising claims costs.

Speaking at Co-operators General’s hurricane preparedness promotion at the Patrick E. McDonald Building, Upper Collymore Rock, St Michael, yesterday, he said insurance companies were facing significant financial pressure as claims costs had now exceeded premium income across the industry.

“What I can say is that for every $100 in premiums being collected, the last industry figures I saw indicated that approximately $112 was being paid out in claims. Essentially, the industry was paying out more than it was taking in.

“That means there is no profit being generated from motor insurance under those circumstances. For any business to remain viable, it must be able to operate sustainably and that is one of the reasons why premiums have had to increase over time.”

While he did not provide specific industry-wide figures, Holder said insurers had paid out millions of dollars in claims over recent years.

“We are seeing increasing claims payouts, not only because of vehicle repairs and write-offs but also because of the rising costs associated with personal injury claims.

“When someone is injured in an accident and pursues legal action, those costs can be significant. Add to that vehicle rental expenses while cars are being repaired and the overall claims bill continues to rise.”

Holder added that when they took “a deep dive” into the accidents and their causes, many were occurring as a result of inattentiveness and a lack of patience by drivers.

“We are seeing a lot of accidents where somebody is exiting a side road and collides with a vehicle travelling on the main road. We are seeing collisions caused by improper overtaking and other risky driving practices.

“What that tells us is that there is a degree of impatience and inattentiveness on our roads that is contributing significantly to these incidents,” he added.

He noted that distracted driving, particularly the use of cellphones behind the wheel, was becoming an increasingly common factor in accident reports.