Diaspora can shape regional insurance industry
THE general manager of JN Life Insurance Company said there were opportunities for nationals in the Caribbean Diaspora to contribute to the regional industry as investors, consumers and professionals.
For instance, remittance habits of nationals overseas presented opportunities for the region to tailor insurance products for the Diaspora.
"Remittances are in many ways already being used for insurance purposes," he explained, pointing to data from a 2010 Bank of Jamaica study, which showed that as much as seven per cent or about $140 million of some US$2 billion being sent to Jamaica annually was being used to cover medical expenses by recipients.
The Caribbean can similarly target products to its Diaspora, estimated to be about six million, said Tomlinson at the 28th Annual Sales Congress of the Caribbean Association of Insurance and Financial Advisors (CARAIFA) hosted by the Jamaica Association of Insurance and Financial Advisors (JAIFA) at the Hilton Rose Hall Resort and Spa in St James last week.
"Health and life insurance policies, with premiums financed by funds remitted by family and friends overseas, can improve health coverage of people in the Caribbean who may have little access to health and life insurance," Tomlinson noted. Only about 19.5 per cent of Jamaicans have health insurance, as data from the Planning Institute of Jamaica reveals.
Regional companies could also look at developing individual pension packages for returned residents, targeting those who are self employed or contractually engaged; and he also maintained that many persons overseas also send funds for savings, home improvement, construction and business investments.
"These investments not only provide insurance against uncertainties for the migrant in the developed country, in the event of economic catastrophes or assurance for their loved ones at home; but, are also capital investments, which have the propensity to generate business for the regional insurance industry, as many of these investments usually require indemnity," Tomlinson said.
He argued that the offering of these products in the Diaspora provides a context for the regional industry to strengthen its technology base and move more quickly towards mobile insurance.
Highlighting figures from the 2013 World Insurance Report to substantiate his case, he said a fifth of insurance business was expected to be generated via the internet by 2018, while another eleven per cent would be generated from mobile devices. He said it was, therefore, imperative for the Caribbean to begin moving in this direction.
"A recent study of migrants from Latin America and the Caribbean living in the US by the Multi-Lateral Investment Fund of the Inter-American Development Bank (IDB) shows that roughly a quarter of migrants monitor their banking transactions using mobile devices, while 13 per cent use their cellphones to do mobile banking," he said. "Mobile insurance, therefore, provides a sustainable platform for the Caribbean Insurance Industry to grow by broadening and retaining its customer base through an accessible Diaspora."
In addition, he stated that more than 80 per cent were tertiary trained professionals, with as much as 12 per cent having expertise in mobile and Internet technology; 14 per cent in banking and brokerage and five per cent in insurance, according to the IDB study, which can be used to strengthen the industry.
"I believe the skills cannot only be tapped into to move the insurance and wider financial industry forward, but can be used to help strengthen other important areas of the sector, where innovation and management have been difficult to address, but is necessary to protect against vulnerability," Tomlinson argued, pointing to the sticky issue of agricultural insurance.
He also noted that existing products are limited in their reach and difficult to maintain; but, having a model was important, if the industry is to remain an important contributor to GDP and the region's food security.
"A significant number of these persons have expertise in insurance and financing, but there are also many scientists, making up about 14 per cent of the community, which can add to innovating a sound model for providing some level of indemnity," he argued, suggesting that the model could also, in the end, benefit from direct monetary investments or contributions from the Diaspora to establish a stable pool for farmers.
He says the contributions may either be used to shore up existing models of risk insurance for the industry or create new facilities, which provide cover for farmers and small property owners; or used to subsidise premiums.
"This is a general insurance product that has to be given very careful consideration, however" he stressed.
Tomlinson highlighted that although the regional industry is modernising and growing, it stands to benefit from better engagement of the Diaspora. "The Future is bright for our industry; however, we must engage the members of our Diaspora if we are going to build an insurance fortress that forms the bedrock of a strong and robust Caribbean economy.