THE outlook of the Jamaica International Insurance Company Limited (JIIC) was revised from stable to negative by AM Best, an insurance rating agency, due to its continued under-writing losses.

“We are adapting to a low-interest rate, low-inflation business environment. We have to be a little more selective, a little quicker and less tolerant with areas that have higher claims,” said Andrew Levy, managing director of JIIC.

JIIC’s losses were made worse by “depressed investment income levels expected in the future, due to lower interest rates caused by the restructuring of the Jamaican bonds”.

To address the concerns outlined by AM Best, JIIC is in the process of implementing several strategies that it hopes will bring about a turnaround.

These include monitoring more closley the cost of paying out on claims. This will help it to deal with the loss ratio. He also aims to reduce the cost per transaction through more efficient internal operations.

JIIC also plans to monitor the performance of its brokers and agents, rewarding those who give the company profitable business.

Previously, the underwriting of losses was made less severe by the insurer’s investment income.

“Historically, JIIC reported consistent overall earnings as a result of its steady investment income, and this has enabled the company to enhance its capital position. The company continues to maintain adequate risk-adjusted capitalisation. As an integral member within the GraceKennedy Group Limited (GK Group), JIIC enjoys strong parental support and commitment as evidenced by GK Group’s past capital contributions and its stated willingness to make

additional funds available should the need arise.”

AM Best also affirmed JIIC’s financial strength rating of B++ which the New York-based rating agency claims is “good”.

However, even with good financial strength and a strong reputation for acquiring invest-ments, which increases its financial strength, JIIC will experience a reduction in its investment income, AM Best said.

Despite the implementation of strategies by JIIC to improve underwriting results, AM Best remains uncertain about the effectiveness of such strategies given the current challenges that the Jamaican insurance market faces.

Among the challenges affecting JIIC’s growth are the lack of geographic diversification, the continuing challenges in the country’s macroeconomic environment and the high cost of the company’s reinsurance programme, due to its dependence on reinsurance for earnings and surplus protection from catastrophic events, said AM Best.