NEM looks to property market to counter motor insurance decline
Published:Wednesday | January 19, 2011 | 12:00 AM
Avia Collinder, Business Writer
NEM Insurance Jamaica Limited is this year looking for continued growth in its property and liability insurance business segments that showed strong performance in 2010, to make up for falling returns from the company's motor book.
To help drive the flagging motor insurance business, NEM is now directly attaching its offer of automatic membership to Jamaica Automobile Association (JAA) to its motor policies, rather than through insurance brokers, according to NEM general manager Chris Hind.
Both are subsidiaries of Jamaica National Building Society.
NEM currently writes just over half of its business through intermediaries and the JAA membership is known for its roadside assistance and extensive network of discounts.
At the end of June 2010, NEM was said to have controlled about 12 per cent of overall market share in general insurance with 15 per cent of the motor market and 10 per cent of the non-motor - property and liability - lines.
The current year outlook is for motor insurance to remain challenged.
"Sales should be similar to last year with reductions in the motor book, as we look to improve the quality in that area, being offset by strong growth in property and liability insurance - areas that we have targeted for expansion," said Hind, noting that all the numbers for 2010 were yet to be collated.
At the end of December 2009, NEM recorded gross premium income of $3.14 billion, but incurred underwriting losses of $1.47 billion in its motor business, resulting from high levels of automobile crashes and motor-vehicle theft.
In response, the company has invested in technology to stream-line back-office operations and has also engaged in a staff redundancy exercise, plus plant upgrades, between 2009 and 2010.
Hind said NEM remained one of the strongest companies in the market in terms of capital and capital adequacy, and that this year, the company would be looking to even deliver better returns to shareholders and improved customer service "especially at claims time".
Reflecting on 2010, Hind said one of the biggest challenges for the industry was the escalation in the cost and frequency of motor claims.
"The rising cost of settling these claims is directly related to the continuing poor use of the roads by some drivers and the high frequency of serious crashes, which leave third parties, passengers and bystanders seriously injured or worse," he said.
NEM plans to reward good drivers with its underwriting and pricing policies, he said, as its contribution to safer road use.
The JAA benefit, he said, was one way in which NEM and JNBS have collaborated to offer attractive motor insurance to their members. Currently NEM processes 14 per cent of its insurance portfolio through JN locations.
"Both organisations saw an opportunity for strong growth whilst bringing meaningful, value-added benefits to our mutual customers," said Hind.
To access the complimentary JAA membership, which last year was offered to all NEM policyholders whether they booked directly or through brokers, new and renewing NEM motor insurance clients are required to have an account with JNBS.
JAA operates a 24-hour response and repair service nationwide.
"The JAA is NEM's strategic partner in giving our customers peace of mind on the road," Hind said.