Cash crash - Collisions to drive up premiums as insurers rack up half a billion in losses from road carnage
Jamaican insurance companies racked up underwriting losses totalling $570 million over the first half of this year, mainly because of the carnage on the roadways, which has claimed close to 400 lives.
The more than half a billion dollar in losses recorded between January and June is in stark contrast to the $170 million underwriting profit insurance companies realised over the first six months of last year, according to the Insurance Association of Jamaica (IAJ).
Underwriting profit or loss is the difference between the premiums charged by an insurance company and the claims and other expenses they pay out.
Peter Levy, president of the IAJ, revealed, too, that over the first six months of this year, insurance companies paid out or expect to pay claims totalling $7.4 billion, a 20 per cent jump, or $1.4 billion more than they did for the corresponding period in 2018.
Levy acknowledged that the figure includes vehicles that were reported stolen, but said “the vast majority of it is from collisions and bodily injuries.”
“So both of those [figures] kind of show the clear significant impact of motor vehicle accidents,” he told The Gleaner yesterday.
Declaring that the situation facing insurance companies was not viable, the IAJ president predicted that drivers would face higher premiums.
“In other words, we can’t keep going this way. If you lose $570 million in half a year, in a year, you are losing $1 billion. This is not a sustainable state of affairs,” Levy insisted.
“I would expect that companies would have spent much of the second half of the year looking at their pricing and coming up with the necessary changes, which, in these circumstances, is likely to mean increases for some categories of drivers.”
According to the National Road Safety Council (NRSC), 392 persons have perished in motor vehicle crashes since January 1 this year, the highest number of road deaths recorded for a calendar year in nearly two decades. For the similar period last year, 352 persons were killed in motor vehicle crashes.
Jamaica has recorded more than 400 traffic deaths five times since 1985, according to statistics compiled by the NRSC.
The 392 road deaths recorded this year include 116 motorcyclists, which represents a 32 per cent increase over 2018; 26 children, up 24 per cent from last year; and 56 elderly persons, a rise of 30 per cent.
Forty-seven persons were killed in motor vehicle crashes in April, the highest for a one-month period this year. October had the fewest with 25.
In November 2018, Jamaican lawmakers passed into law a revised Road Traffic Act that replaces its 80-year-old predecessor legislation and provides stiffer penalties for drivers who flout the law.
The new legislation outlaws the use of hand-held devices by drivers and provides increased fines for speeding, seat belt non-compliance, and other traffic offences. It also makes it clear that the Island Traffic Authority is the entity responsible for the regulation and control of traffic on the nation’s roadways, ending a debate among law-enforcement agencies.