Barbados is doing well in the area of international insurance.
So says Chief Executive Officer of the Financial Services Commission (FSC), Randy Graham, who is reporting that the country has seen year-on-year growth in registration of such companies every year since 2012, and this has assisted the country in being ranked in the top 10 globally as a domicile for international insurance.
Additionally, speaking at the Domestic Financial Institutions Conference hosted by the Central Bank of Barbados, the FSC and the Barbados Bankers Association Inc., which was held recently at the Lloyd Erskine Sandiford Centre, Graham further revealed the local non-bank financial sector in general has been performing well. He said that FSC has done several things over the past five years, which have aided signs of stability in the financial system, allowed for early action being taken against entities moving in the wrong direction, and created a platform for growth in the non-bank financial sector.
Giving specifics on the sector, the FSC head indicated that there are 21 domestic insurance companies maintaining in excess of Bds $3.2 billion in assets and paying out over Bds $175 million in claims to persons annually and some 35 credit unions in operation domestically with total assets of Bds $1.94 billion, of which Bds $1.42 billion represent loans made to Barbadians.
“We have 21 mutual funds operating in Barbados with $1.8 billion in assets under management which have been invested by Barbadians and over 300 pension plans with nearly $2 billion in assets under management for use by persons in their retirement age. So whereby the level of year-on-year growth has been sluggish, the total aggregate of invested assets, which are appropriately protected and being put to work, is substantial in this country,” he said.
Graham acknowledged however that like every other financial system, they do experience challenges, but face those challenges head on, taking any action necessary “without fear or favour in the best interest of the system and those persons who need protection”. He bolstered the point as he noted that Barbados has been experiencing one of the longest soft cycles ever seen in the domestic insurance sector, which has led to premium rates being low for long periods. He explained that while this has been good for consumers, the FSC recognises that it is an issue that they have to continue to monitor as it relates to the liquidity of the insurance companies. Another challenge, he noted, has been the spike in the non-performing loan in the credit union sector. He said while it appears to have levelled off and is now slowly declining, appropriate provisioning for these loans and accurate estimations for net recoveries must be made.
But through the challenges, he said there are also opportunities which the various aspects of the sector can capitalise on.
“Opportunities to see continued growth in the Credit Union sector, not just through the assets side, but through an expansion of the services which they can offer to consumers. In the area of Insurance, although premium rates are low, we are seeing growth in the types of products being made available to consumers and we can now have insurance for retro vehicles, condominiums, and chattel houses in this country. We now have opportunities to set aside appropriate deferred income for your retirement years in an occupational pension plan with the flexibility of a drawdown annuity account, as we move to ensure that we plan appropriately for our retirement age and that the necessary funds are available when we come to that stage,” he said.