Do You Know Why Your Insurance Premiums Went Up?
Insurance premiums – it is a conversation we don’t want to have until an accident, misfortune or disaster hits and we need that financial support to get back on our feet. Since the first quarter of 2023, the premiums Belizeans pay on various policies have all gone up – from health insurance to property, and vehicle insurance. The rationale is that across the board, inflation, the impact of Hurricane Lisa, as well as the frequency with which motor vehicle accidents have been occurring, particularly motorcycle accidents and the cost for repairs, have all added to the overall hike in premiums. But while this can be seen as a reasonable justification for an increase, motorists have been chief among the critics, perhaps not against an increase, but the rate of that increase. It’s an issue that the insurance companies feel is a sign of the times, but one that Prime Minister John Briceño also feels the government could have a discussion about. News Five’s Marion Ali presents the details of this topic in this edition of our Five Point Breakdown.
Marion Ali, Reporting
The inflation that we’re currently experiencing has infiltrated every sector of life, including the insurance industry. Earlier this year, insurance premiums increased across the board, some policies more than others, by exponential percentages. An insurance premium is the price paid for protection from a loss, hazard, or harm. The word “premium” is derived from the Latin praemium, meaning a “reward” or “prize.”
What Are Insurance Premiums?
Insurance premiums are monies that people or businesses pay to insurance providers periodically as an investment in property, life, or health and look forward to in times of accidents, misfortune or disasters.
Why Have Insurance Premiums Increased?
Norman Moore is the president of the Organization of Insurance Companies of Belize, ORINCO. He shares a candid view on the increases, stating that it is a sign of the times. The costs of almost all goods and services have gone up, including the cost of construction materials. Moore says, so too must insurance premiums.
Norman Moore
Norman Moore, President, ORINCO
“There has been a 16 percent increase in the estimates from five years ago. Basically, it took a natural disaster to really highlight the situation for the entire industry, and that situation was Hurricane Lisa off on November 2nd, 2022. In December of 2022, ORINCO held its meeting, and all of us collectively agreed that there has to be something done because of all the losses that we had sustained and seeing that a majority of it now is what we would term as underinsured. The next factor that I wanted to touch on was the fact of reinsurance. Remember that every company here is reinsured with a company outside. Now, we are dictated by the reinsurance treaties that we sign with those larger companies.”
Interestingly, even though the insurance premiums on property also went up, Moore said that homeowners have shown a keener interest in getting their property insured. He feels that it was prompted by the pummeling that Hurricane Lisa put on Belize last November.
Norman Moore
“From what I see, there has been an increase in the property insurance due to the occurrence of Hurricane Lisa. You have to remember that Hurricane Lisa was the first hurricane that actually came close to Belize City, to the center. And that, I mean, it was extensive damage, noh, so, after that experience, I do believe that persons really took that to heart and started to look into insurance, noh.”
According to Moore, COVID also piqued people’s interest to make inquiries into health insurance coverage, but he couldn’t readily say whether that sector has seen any significant change in clients overall. One area of the insurance industry that has become part of living room conversations, however, has been the soaring premiums on motor vehicle insurance.
What Other Factors Played A Role In The Increase In Premiums?
This chart shows the new rates for every type of coverage under motor vehicle insurance. The last one at the bottom applies to motorcycle owners, whose premiums have jumped from one hundred dollars to two hundred and forty-five dollars. This was the latest scene of a fatal motorcycle accident. According to Moore, these kinds of accidents involving motorcycles have been the most frequent to occur and have caused an impact on the insurance industry.
Norman Moore
“We have at least five to maybe seven motorcycles accidents a week. They’re the claims that are being brought to us. It’s not only us that you know, my company, but all companies agree that even though we understand the motorcycle is cost effective in, you know, fuel efficiency to get you around. However, people are not really, I say, driving carefully with these.”
Marion Ali
“You mean motorcycle drivers?”
Norman Moore
“Yeah, motorcycles. We have, because remember what we do in order to come up with the figure, we have to evaluate our claims history that we are getting now compared to, you know, how many motorcycles we’re insuring. So for every one accident that a motorcycle causes or is a party to that, you have to think that you would immediately pay out, I don’t know, almost in excess of $50, 000 because invariably the bodily injuries that occur or result from that accident. is almost immediate. So, anytime there’s an accident with a motorcycle, there’s heavy or a lot of bodily injury that we see.”
Public Response To The Increases
But with all this explanation, when we took to the streets and spoke with three motorists, two of whom own motorcycles, they were more concerned about the pinch that the sharp increases in motor vehicle insurance have put on their pockets.
Marlon Clark
Marlon Clark, Motorcycle owner
“Last year I think I pay, da mi $150 I think or one-something. Now this year I gone pay and da mi $2 45. I mi kinda freak out like (beep), $2 45! I neva even know, to God, like I neva know ih gone soh high. $2 45 fi pay real rough though. And no kind of explanation, nothing. Ih just gone up. Nobody tell wi nothing that yoh know, the cycle thing wa raise to. I mi kinda shock.”
Voice of: Dominique , Motorcycle owner
“My insurance up next month. So, then I just have to pay. It is what it is. I just have to adjust.”
Marion Ali
“How does it affect you?”
Voice of: Dominique
“By more than double, soh da like I di pay fi wa vehicle almost.”
Leonicio Patt
Leonicio Patt, Taxi Driver
“I know this last time when I insure it, ih gone up $25 more, the insurance. Dehn charge mi $25 more pahn the insurance. The gas gone up and you have to charge more on the taxi fare. And people complain about it and some people don’t like it, but they have to like it because gas gone up and we have to go up on the price too. Gas gone up and insurance gone up.”
What’s Next, And Is There A Possible Adjustment Ahead?
While insurance premiums are set solely by the private insurance companies after they conduct reviews, the topic is one that Prime Minister John Briceño believes can be taken up with the supervisor of insurance, at least to ensure that the prices charged are also not being inflated.
Prime Minister John Briceño
Prime Minister John Briceño
“I feel for our citizens. That I think I would have to bring that up with the supervisor of insurance. They are completely independent of the government as to how they do their policies. All of that is based on the amount of accidents that we have and how people manage their vehicles. So, a lot of that is driven by the private sector. Now, of course, we as a government, have a responsibility of ensuring that they are not being taken advantage of, so it’s something we’d probably have to take up with the supervisor of insurance.”
Moore says that when the inflation rate subsides and the war in Ukraine ends, a discussion can be had among the insurance companies to decide how they will treat that scenario. Marion Ali for News Five.
