Clarifying NEM's motor business

The Editor:

There are two factual errors in the news story 'NEM looks to Property Market to Counter Motor -Insurance Decline', which was published in the business section of The Gleaner, on Wednesday, January 19, 2010.

First, the news story implied that NEM Insurance Company Limited offers complimentary membership to the Jamaica Automobile Association (JAA) to its direct customers only. This is not so.

We have indeed worked with our parent company, the Jamaica National Building Society (JNBS), to build a special motor-insurance offer, which includes JAA membership at no additional cost. To qualify you must have comprehensive insurance and be a member of JNBS.

However, it does not matter whether you insure with us directly or through an intermediary, complimentary JAA membership will be included in your insurance package.

At a time when road incidents are extremely high, we believe that this is an extremely valuable benefit.

The JAA is best known for its high quality and efficient accident and breakdown response, therefore, if anything goes wrong, no matter how serious, at anytime, anywhere across the island, call the JAA and they will respond immediately to help you on your way.

Second, the article stated that NEM sustained a motor-underwriting loss of $1.47 billion in 2009! That is incorrect. The year 2009 was not the best year for our motor business in terms of payouts for road incidents, and the losses were significant.

At the same time, it is important to point out that there is a difference between underwriting losses, which compare premium to claims, operating expenses, and gross profit, which includes all other income streams.

And, it should be noted that despite the underwriting losses, NEM remained comfortably profitable in 2009.

In 2010, we improved our motor- underwriting performance substantially, embracing a clear underwriting philosophy that focuses on identifying, protecting, and rewarding those drivers and vehicle owners who use the road safely.

This has enabled us to keep our premiums at reasonable levels, while lowering our cost of claims to the benefit of our policyholders.

I wish you and your readers safe driving on the roads throughout 2011.

Chris Hind

General Manager

NEM Insurance

Company Limited