Inniss: Too many insurance companies, brokers
Minister of International Business and Small Business Development, Donville Inniss is of the view that the local insurance industry is being compromised by the number of insurance companies and brokers.
Inniss delivered the feature address at the 39th annual luncheon of the General Insurance Association of Barbados (GIAB) at the Radisson Hotel on Friday. He told the gathering that in Barbados there are currently 22 domestic insurance companies and 23 insurance brokers employing around 500 agents and salespersons.
He noted these numbers make the sector an extremely competitive one which may spell trouble for some insurance companies who do not have majority market share.
“As Minister responsible for the Fair Trading Commission perhaps I should always be encouraging competition but the simple reality is we have to ask ourselves what is the absolute number of entities we can have in each industry in Barbados and I will say to you that I am beginning to [think we] have too many insurance companies and for sure too many insurance brokers in Barbados.”
He noted in recent times insurance rates, particularly for property and motor vehicles, have dropped, resulting in low profitability in the industry. Inniss said the reality is the insurance market is a stagnant one and as it would be unrealistic to drop rates any further, some companies may be forced to merge with others.
“And you are competing in a market size that is not growing so therefore, unless you are able to cut your costs dramatically, you are not going to be able to survive financially. You can carry the weight for a little time but there is going to come a point in time when you are going to put yourself up for someone to acquire or you’re going to have to merge or you’re going to have to fall by the wayside.”
He urged the GIAB to focus on improving the overall performance of the industry by offering a more diversified range of products as well as better customer service so as to attract and retain clients.