Insurance Association of Jamaica (IAJ) President Vernon James says while industry players empathise with businesses that have been impacted by the current health crisis, business interruption insurance clauses do not cover losses due to viruses such as COVID-19.
“This risk was never priced into the premiums charged and is excluded from standard reinsurance contracts. Any assertion otherwise is simply incorrect,” he said in a statement this week in response to media statements calling for the industry to pay for business interruption losses due to COVID-19.
“The IAJ recognises that all Jamaicans are facing unprecedented disruptions due to the novel coronavirus. Our member companies are sympathetic to the plight of all Jamaicans and are working proactively to assist our customers during this crisis,” the IAJ president said.
He said insurers are working with customers by providing flexible payment solutions with additional time to pay without interest; waiving late fees; pausing cancellation of coverage for non-payment and policy expiration; extending grace periods; and offering discounts. Furthermore, he noted that a number of motor insurers have offered special deals in recognition of the reduced level of vehicular traffic on the road and a reduction in road fatalities since the stay-at-home order was introduced.
James said that IAJ members have also contributed to the Government’s efforts to jump-start the economy and to provide a safety net to those most affected.
“The IAJ has joined with other regulated financial institutions to forego the reduction in asset taxes for 2020-2021, adding $3 billion to the COVID-19 contingency fund. These taxes were imposed on the financial sector to support the revenues required to pass the International Monetary Fund tests a few years ago,” he outlined.
Meanwhile, he said the industry has ensured that individuals have adequate supplies of medication, adding that it does not anticipate any adverse effects on life and health insurance policies as COVID-19 remains contained in terms of deaths and illnesses. However, James said there will be fluctuations in the value of some investments in the current economic environment, but these are expected to recover as the economy starts to improve once the crisis has passed.
“The life insurance industry is a long-term business. Companies have made provisions with pharmacies for persons to keep up to three months’ stock of prescribed medication to ensure they have adequate supplies in the event of disruptions,” he stated.
In 2019 insurers paid out $21 billion in group health benefits, $23 billion in individual life benefits, and more than $13 billion in motor insurance claims.
— Alphea Saunders
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