Members of the insurance and pension industry are urging whoever forms the Government after the upcoming general election to consider legislation which will provide financial incentives and tax benefits for people joining insurance and pension schemes.

At a recent Monday Exchange hosted by the Jamaica Observer, leaders from across the sector warned that Jamaica is facing a looming crisis, with up to 80 per cent of private sector workers not having any form of pension coverage and over 70 per cent of Jamaicans lacking any form of life insurance.

They argue that without legislative backing for initiatives such as micro-insurance and micro-pensions, the country will be ill-prepared for the realities of an ageing population.

General manager of JN Life Insurance Hugh Reid recalled a time when tax credits made insurance policies attractive, especially for young professionals.

“There was a time when I graduated from university, the first thing that many persons did was to buy insurance policy. You know why? Because they got a tax credit, but when the tax system was restructured that went away… and this is part of our argument, they [Government] have legislation that they need to pass and they don’t need to pass but they need to find ways where they can provide an incentive,” he said.

Reid believes the Government must create a framework that encourages people to save, especially through insurance.

“They can provide a financial incentive to say that if you buy an insurance policy for $6,500, you will get all of it as a tax credit, half of it as a tax credit…” he said.

Echoing similar sentiments, Everton McFarlane, executive director of the Insurance Association of Jamaica (IAJ), suggested that financial incentives don’t have to come solely in the form of tax credits.

“It doesn’t have to be a tax credit per se. What I’m saying is that there are options that can be used, even our own examples in the past, which may involve or which can involve tax benefits to the persons involved to allow for persons to feel an incentive to save, and then you provide an option where those savings can be channelled into financing an insurance coverage, into financing health coverage, into financing pension,” McFarlane said.

He explained that with the right framework in place, savings schemes could be linked directly to insurance products, making it easier for Jamaicans to build financial protection over time.

Adding to the discussion, CEO of Canopy Insurance Oliver Tomlinson argued that the approach to driving greater insurance uptake must also include a cultural shift backed by practical benefits.

He pointed to other successful Government interventions such as the National Housing Trust (NHT) and Education Tax, which have helped to normalise payroll deductions in the public interest.

“I always believe that where there’s a will, there’s a way. As a country, we faced a crisis years ago in our education system where we decided, we’re going to put on education tax on a person’s salary. There was the NHT that came into effect to say, okay, the purpose of this is to allow persons to afford houses. I believe strongly that we can put changes in place that causes people to act in a particular way… sometimes, to get a particular behaviour, you have to legislate because we don’t always know what is best for us when we are of a particular age group,” said Tomlinson.

He also suggested that Jamaicans would be more likely to buy insurance if they knew they would see a return or benefit while they’re alive. “It’s hard to sell a man something that he’s going to pay off when he dies. It’s hard for him to consider, but if you can see a living benefit as they go along, then we need to change the mindset towards it,” he said.

In the meantime, they are all renewing calls for the government to pass the microinsurance legislation which will allow for Jamaicans who are not apart of the formal workforce to have an opportunity to join an approved insurance scheme.

Rosemary Henry, president of the IAJ, emphasised that this legislation is long overdue and would enable the development of innovative, low-cost insurance products specifically designed for low-income earners.

“We have been waiting on the micro-insurance legislation. When will that come on? That is going to help those lower income persons to get better coverage. It’s going to allow the insurance industry to provide more innovative products. And that goes right across the pension as well. Micro-pension is something that can also support our population,” Henry said.

She also argued that the legislation would allow for more flexible policy structures, tailored to people’s varying financial capacities.

“It allows us to even reduce the cost somewhat that you would have to pay for that micro-insurance. Because you now have more options… I can get 1,000 here as it relates to coverage because that’s all I can afford right now and I can top it up,” she said.

Everton McFarlane added that while expanding access is vital, proper regulation must accompany it to ensure client protection which he said can only be put in place with the necessary legislative changes.

“What the micro-insurance legislation tries to do is to create a proper framework that widens the pool of persons who can participate in that distribution channel. It doesn’t change the entities that fundamentally have to carry the risk.When you start to democratise the distribution, you have to make sure that the actors we are allowing are actors that will behave properly… the legislation allows for standards. It allows for obligations in terms of reporting. It allows for obligations in terms of just basic fitness,” he explained.

Furthermore, director of the Pension Industry Association of Jamaica (PIAJ) Desmond Johnson also underscored the need for micro-pension legislation. He pointed to creative approaches such as rounding up retail purchases to contribute small sums to pension savings.

“For example, you go to a retail store and your bill comes to $450. You can round it up… and that $50 can go to a micro-pension savings or maybe an insurance with a flat coverage for debt. These are the creative things that we can do once those legislations come into being where even the bottom of the socioeconomic ladder can be a participant,” said Johnson.

However, during her maiden budget debate presentation in March, Minister of Finance and the Public Service Fayval Williams confirmed that the long-anticipated microinsurance legislation will be introduced to Parliament in the current fiscal year.

“Not every Jamaican can afford the premiums for traditional insurance sold here in Jamaica, so we have to meet the people where they are. The microinsurance legislation has been talked about; but I give my commitment that microinsurance legislation will be passed in this new fiscal year,” Williams said.

She noted that once implemented, the law will pave the way for affordable insurance products—including policies with premiums as low as $250 monthly for a $500,000 benefit.

Williams also announced that all PATH families will be given access to microinsurance as part of efforts to build financial resilience among vulnerable households.

From left: CEO of Canopy Insurance Oliver Tomlinson; president of the Insurance Association of Jamaica Rosemary Henry; and general manager for JN Life Insurance Hugh Reid speaking during the Jamaica Observer’s Monday Exchange. (Photo: Naphtali Junior)