PEOPLE are mostly buying insurance policies for living benefits such as retirement income and to fund university education, says the Insurance Association of Jamaica (IAJ).

The IAJ revealed the trend in its recent assessment of the inurance industry’s performance in 2013. The life insurance industry paid out 32 per cent more in benefits last year compared to the prior year.

“Some of the increase in encashments would also represent persons drawing on their policies, given ease of access to deal with their financial pressures in a recessionary economy,” the industry report said.

Gross premiums for life insurance were $28.9 billion in 2013, five per cent up from the previous year, while for new business, annual premiums moved up by two per cent and sums assured climbed by 12 per cent.

As for general insurance, preliminary figures show that gross premiums last year was one per cent more than 2012.

Motor premiums, which represented 50 per cent of all premiums in the industry, totalled $14.9 billion. But motor claims, which stood at $9.2 billion accounted for 90 per cent of all claims.

Though there’s about 300,000 cars insured, based on the IAJ’s preliminary data, official data suggests that there are 100,000 more cars on the road.

Consequently, this has negatively impacted the industry’s ability to settle claims, IAJ said.

So, the industry is focusing on improving the claim settlement process with the assistance of arbitration done internally and mediation as well as with the help of the Dispute Resolution Foundation, because litigation is both time consuming and costly.

What’s more, the industry has seen personal injury claims double over the last five years.

“It is an area of concern for us while we are in the business of providing protection to compensate for injuries as a result of motor accidents, there have been a number of claims which have caused us to suspect that insurance fraud was being committed,” IAJ said. “It has become a menace both locally and internationally and will cause premiums to climb.”

Preliminary data on the insurance industry at the end of 2013 show the industry with total assets of $304

billion or 15 per cent of the

financial sector.

Specifically, life insurance companies have assets of $250. 2 billion, while the general companies have assets of $54.3 billion.

The IAJ, as part of its strategic plan, is seeking to build awareness about the importance of insurance as the level of insurance penetration in the population is low and has started various awareness campaigns such as expos an presentations.

“Too few people are prepared through insurance to deal with a misfortune involving the loss of life or property,” the IAJ said.

Meanwhile, Karen Bhoorasingh, was recently elected president of the IAJ.

She is the President of Guardian General Insurance Jamaica Limited, recently formed through the acquisition of Globe Insurance Company by the Guardian Group-owned West Indies Alliance Insurance company of which she was general manager.

Bhoorasingh succeeds Hugh Reid, president of Scotia Life Insurance Company, who had served as president of the IAJ since April 2012.