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rt-of-Spain: A warning from Central Bank Governor Ewart Williams that commuters will have to brace for higher transportation costs. It comes after the Central Bank discovered that insurance companies have been underpricing Motor Vehicle Insurance policies.
As the bank moves to correct this, Governor Williams says there’s no doubt that consumers will soon feel the pinch.
The Governor says that in some cases insurance costs may even double.
In presenting the Financial Stability Report for 2010 to June 2011,Governor Williams explains that Motor Vehicle Insurance companies were offering cheap motor vehicle insurance which led to a consequential understatement of claims reserves.
Inspector of Financial Institutions Carl Hiralal said the underestimating of claim reserves is not a new occurrence but he says the real effect of the problem was brought to light when the Bank assumed regulatory responsibility of Insurance Companies.
Head of the Association of Trinidad and Tobago Insurance Companies, Douglas Camacho admits that the Association is aware of the situation. He agrees that action must be taken to ensure the stability of the non-life insurance sector.
Governor Williams says the Central bank has already taken action against two companies and has another in court over the issue.
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