High risks associated with the likelihood of fires, flooding and damage to property resulting from riots make insurance coverage costly for businesses trading in the city.
In some cases the risks might even be considered sufficiently great to cause some insurance companies to decline to provide coverage.
The local fire department has continually pointed to the long-standing existence of what one official told Stabroek Business was a “cocktail for crisis” – that is, old, often rotting wooden buildings packed with combustible consumer goods and boasting fragile glass windows and tangles of dated electrical wiring. Their age apart, these structures were never constructed for trading in the first place. They are, to put it mildly, recipes for disaster.
Caricom General Insurance Marketing Manager Aneeta Shivprashad says the risks associated with trading in the city mean the insurance premiums are high, ranging in some instances from between 4 to 7 per cent of the value of the property annually.
Shivprashad says downtown traders are likely to have fire and full perils policies that covers everything from having a rock thrown through their show windows, to suffering losses resulting from an assault by an angry mob. Regent Street, particularly, justifies fire and full peril coverage.
“The procedure that we use seeks to ensure that the premises are used for we are told they are used for,” she says. Inspections generally target a range of issues including the physical condition of the building, the storage of flammable material and safety conditions including fire exits.
The evidence of many of the older commercial buildings in Georgetown is that safety regulations and precautions are honoured in the breach. In many instances it is a matter of cost. Rendering faulty electrical cable could mean rewiring entire buildings and the extent of the investment, it seems, exceeds the risks associated with ignoring the likelihood that faulty electrical fittings could spell disaster.
Stabroek Business learnt from another source in the sector that however challenging the conditions, insurance companies generally find a way of embracing the risk. “The cost of coverage in the commercial sector has everything to do with the risks that insurance companies [must take]. In the downtown Georgetown shopping areas one of any number of problems can arise. You have to understand, however, that the culture of this industry is that if one company declines to provide insurance another will; and no one wants to lose business,” the insurance executive told Stabroek Business.
It appears that among the seven insurance companies and six brokers in Guyana there are unwritten rules with regard to the manner in which business is conducted.
Shivprashad is an advocate of more public education about insurance. “Businesses sometimes take too much for granted and that, often, does not work in their interest,” she says. The industry provides limited public information for clients and potential clients but Shivprashad feels more perhaps can be done, particularly through the Insurance Association of Guyana (IAG).
She explains that the inherently conservative nature of the local insurance industry means that it is not “where it ought to be” when compared with the sector in the Caribbean and North America. “That is not to say that the industry has not been successful. The growth of the business sector and the erection of a number of new buildings have meant that there is a large enough market here for us.” What she means is that inherently conservative as it is the sector, perhaps, has not done as much as it can, either to market its services or to create new products for a changing market.
Some of the opportunities which the sector has been slow to grasp are those that repose in the use of information technology to attract what she sees as a “new market” amongst a younger potential clientele. “Facebook,” for example, “is a useful communication channel through which to reach young people. There is potential for use of that particular tool.”
In her role as Marketing Manager at Caricom General, Shivprashad is seeking to help break new ground in strengthening communication links with critical insurance ‘publics.’ Caricom General is currently exploring outreach initiatives on several fronts including exploring community work opportunities with the Guyana Fire Service and undertaking image-enhancing work with the Police Traffic Department to connect with persons pursuing drivers’ licenses’ classes. Shivprashad says that life for the insurance sector since the Clico debacle has been challenging. “The industry has been damaged by the occurrence. There has been a loss of confidence particularly when you consider that a lot of the money has not been recovered. A lot of ordinary people who had put their trust in the industry felt betrayed. However, a lot of the insurance companies have definitely stepped up since the Clico occurrence.”