ATTIC seeks higher priority for forex allocations

The Association of TT Insurance Companies (ATTIC) is seeking a higher priority level for the provision of insurance services to be recognised as trade for the purpose of foreign-exchange allocations.

During ATTIC’s year-in-review event on December 5, president Dean Romany outlined the reasons for this request that the association brought forward in a meeting with the Central Bank.

"Insurers must have reinsurance cover as the capital base of all local insurers is too small to withstand a significant loss in TT. Local insurers use the support of multinational reinsurers in the UK, Germany, Switzerland, Canada, the USA etc.

"We use these companies' capital for significant losses reducing the burden on the state when claims have to be paid, and to ensure that insurance companies are able to sell their insurance products to cover the ever-increasing demands and the increasing insurance values of commercial insurance consumers."

He said a higher property level would ensure the insurance protection gap – the difference between economic losses from disasters (natural or otherwise) and the portion of those losses covered by insurance – is not widened.

"This includes those that do not have insurance, those that are inadequately insured and also insurance companies that are unable to recover from their reinsurance contracts. That also widens the gap.

"The International Monetary Fund (IMF) highlights that disaster recovery is often delayed due to insufficient insurance, impacting long-term economic stability.

"After a catastrophic event there will be a huge inflow of foreign exchange to the economy. And with proper reinsurance in place and reinsurance premiums paid, the inflow of this significant foreign exchange will help with the stability of the economy."

He said some of the key issues affecting the industry include challenges in talent acquisition and retention, supply of reinsurance and regulatory barriers.

"Skilled accountants, actuaries and data experts who can effectively navigate IFRS 17 are in short supply and expensive. Therefore, reliance is being placed more and more on foreign consultants, which has a negative impact on the growth of local resources."

He said locally, premium rates had been affected over the past few years by issues the industry had faced such as hardening of renewal terms, including reduced commissions, increased cost and decreasing capacity and catastrophe cover.

He warned, "Reinsurers have signalled that this trend may continue in the foreseeable future."

In addition, he said, "As the regulatory environment becomes more complex, the need to invest in compliance tools and expertise to manage regulatory risks effectively becomes more critical. Member companies have allocated the necessary financial resources to be equipped to face these new requirements and rules."

He also cited cyber security threats and climate change as key industry challenges.

"We must be ever wary of the increase in cyber crimes, which has become endemic worldwide. The Central Bank recently reported that during the period of 2019-2023, this country’s insurance sector appeared to be the main target of cyberattacks.

"This continues to be a continuing threat, with attacks ranging from ransomware, malware and data breaches. Increased digitalisation of financial services and the rise in e-payments and e-commerce in TT have led to greater exposure to cyber risks and challenges. This is one of the more critical issues to be addressed by members individually and the industry as a whole.

"Additionally, TT is not immune to the impact of climate change. As an island state, we are faced with the threat of coastal erosion, infrastructural degradation, destructive flooding, drought and increasing temperatures. The need to build climate resilience presents a great opportunity for public/private partnerships, particularly in the area of infrastructure development and preservation, which may require long-term financing.

"We are pursuing a meeting with the Minister of Finance to make some suggestions towards improving climate change resilience with support from the insurance industry."

In light of this, Romany encouraged insurers to take environmental, social and governance (ESG) risks into greater consideration.

"The draft Own Risk Self-Assessment Guidelines issued by the Central Bank requires insurers to identify, define and evaluate risks associated with emerging trends in their internal and external environment.

"Accordingly, ESG risks, which are evolving and could have the potential to result in significant financial and reputational damage, must be taken into account. Local insurers must therefore now strive to become ESG-compliant with globally accepted reporting frameworks, develop their internal reporting framework, and integrate ESG into their company and culture."

He said the association remains mindful of its corporate social responsibility, as in 2024, members of the Health Insurance Committee supplied care packages to the elderly of the Princes Town and Arima communities.

In partnership with member companies, ATTIC also engaged secondary schools on careers in insurance, reaching over 1,200 form three-form six students.