CHIEF executive officer of Billy Craig Insurance Brokers Limited, William Craig, says the insurance market will continue to see significant increases in employers’ liability claims this year — even while pricing for other types of insurance is likely to decline.

The CEO reckons that employers’ liability claims will continue to increase as more individuals become knowledgeable about their rights as employees and he believes that insurance companies will increase their premiums to offset the claims.

“Jamaican people have become a lot more aware of their rights, and I also think that there are a lot of lawyers who are chasing down the business and encouraging people to make claims when there really isn’t any,” Craig told the Jamaica Observer in an interview on Friday.

“It’s a good thing that people know their rights, but in some cases it gets carried away,” he added.

The Insurance Association of Jamaica in its 2013/2012 Statistical report, showed that employer’s liability claims reached $187.7 million, up from the $81.7 million, that three insurance companies — British Caribbean Insurance Company, JN General Insurance and Key Insurance — had to incur in 2012.

Employers’ liability claims, which account for roughly 10 per cent of general insurance, has been producing marginal profits, and often losses, for the insurance companies.

“The insurance market is a very dynamic environment and you find that there are a lot of changes taking place in the market,” Craig told Sunday Finance. He added that the insurance companies’ litigation and claims have been negatively impacted over the years as insurance claims continue to surpass the premiums set by the companies.

“As a result, one can expect a higher premium

charge locally, although internationally a lot of liability costs have gone down because of the increased capacity,” he said.

Over the years, general insurance companies have changed from what it was years ago when it relied on high-yielding government bonds to keep their core business profitable. Some have also had their bottom lines bolstered by foreign exchange gains and investment income.

Reduction in property insurance pricing

However, the CEO explained that businesses can expect a reduction in property insurance pricing as capacity continues to increase internationally. There is increased supply, and if there is no demand to match it, then the price is going to be driven down, according to Craig.

“Local insurance companies re-insure most of their risks overseas, and on the property side internationally there is increased capacity,” he stated. “It means that if an insurance company had total risk of about $2 billion, then that company would then go by a re-insurance broker who would seek out various re-insurance companies internationally for the company to place its risk with, and those re-insurers also may buy the insurance, leaving the risk diversified across the world.”

“So, therefore, if there is a disaster in Jamaica and that $2 billion gets disturbed, that business will not go bankrupt because it has purchased sufficient re-insurance,” the CEO explained.

Motor insurance, on the other hand, according to Craig, is becoming very competitive, while there has been a growth in the demand for health insurance.

“Many employees are looking for companies that can provide them with health insurance, so it pushes the employers to offer that as part of the benefit package,” he said.