Insurance Companies Harmonized Third Party Premiums, Is It An Anti-Competitive Process?
Some years ago, the insurance companies got together and harmonized their premiums for third party insurance. So, no matter which company you buy from, once they are a part of the Organization of Insurance Companies of Belize, you will pay the same rate for third party insurance.
When we spoke to the Managing Director of RF&G earlier this week, we challenged that as being anti-competitive. Here's how he answered:
Jules Vasquez:
How is it that insurance companies are able to harmonize rates without it not being price fixing by an antitrust conglomerate?
Andrew Roe, Managing Director - RF&G Insurance
"Yeah, I, so coming to the point of the minimum premiums that exist on motor insurance in the insurance industry in Belize. The industry is vital to not just the transportation of people around this country, but to the safety and protection of of any individual."
"Now, speaking to how can we make that better? Because we're aware that it's not palatable for most people. We as the industry are working on developing a **shared claims repository** where we can share data with one another, and then using that data, we are better equipped to underwrite the risks that we're taking up. Meaning, if Jules is a bad driver, every insurance company will be aware that Jules has had so many accidents and his premium needs to be higher than what perhaps the person next in line is paying because that next person has a clean driving record."
Andrew Roe, Managing Director - RF&G Insurance
"What's happening today is every person who buys insurance is suffering the cost of the bad drivers and the fraudsters, and by removing fraud from the system. First of all, using the system, we're able to bring cost down of delivery of the service to people and secondly, allocate how the premiums are paid so that the drivers who are not as safe as others who don't maybe take their time on the road, who who don't maintain their vehicles as they should, or who just have a poor disposition when they're behind the wheel, those people carry the cost so that the **safe drivers don't have to carry that cost**."
Jules Vasquez:
"At what point do the consumers start seeing lower costs, lower premiums? Instead of insurance companies seeing less risk and less loss?"