Providing better access to life insurance will help to ensure that more Jamaicans can take better advantage of the country’s economic opportunities, says Oliver Tomlinson, general manager, JN Life Insurance.
He stated that, the development of the life insurance sector is an important factor in the overall level of inclusiveness of the economy; and, pointed out that, life insurance provides social protection to individual persons, helps to mobilise domestic savings, and channels it into productive investments.
“We must erase the concept that life insurance is a luxury, which only a small fraction of the people in our society need,” the general manager emphasised. “It is in fact, a valuable tool, which individual persons and companies use to manage their risk exposure.”
Life and critical illness insurance are also essential elements in mortgage agreements, without which, the country’s housing expansion would not have been possible.
“Regardless of your income, life insurance helps you to withstand economic shocks in the event of a major illness or death of a loved one,” he said. “This is important on a national basis as it eases the burden on government to offer financial relief.”
Mr Tomlinson noted that JN Life developed a Single Premium Creditor Life product for small business operators, who need to take out loans to grow their operations. And, explained that this was simply an adaptation of the “Key Person” life insurance policies traditionally used by larger businesses.
“The insurance coverage is available until the loan is settled,” he said. “This means that if a client becomes ill or otherwise incapacitated, the insurance would enable clients to honour their commitments without a major challenge.”
The insurance executive added that, “We adopt a long term investment strategy for these clients’ funds, to ensure that when there is need to make a payout, the resources will be there. Therefore, it means that we must be very cautious, while seeking to make good returns.”
Data from the Insurance Association of Jamaica (IAJ) reveals that there has been steady growth in premium income in recent years, amounting to $5.8 billion in 2017, a seven percent increase over 2016.
Orville Johnson, IAJ executive director, affirms that life insurance is beneficial to the economy, and it is a major source of long-term investments. He said the funds go into government securities; the stock market; corporate debt instruments; and other investments, such as commercial and residential real estate developments.
“Life insurance can also provide collateral for financial transactions, such as the purchase of a house,” Mr Johnson added. “In addition, it is a mobiliser of long-term savings for retirement income and pensions. The long term nature of the financing it provides marks the sector as essential for economic development.”