Gerald Hadeed is a man who has existed in two worlds. As a businessman and chief executive officer of Beacon Insurance company, he has shepherded the company's growth from an asset base of $35 million in 1996, to over $500 million today.
As a politician, he has held two ministerial portfolios (Minister of Tourism and Minister of Communication), been the chairman of a state company (Airports Authority of T&T) and, more recently, he has held the position of an opposition senator.
Never one to shy away from sharing his thoughts on matters, the Business Guardian interviewed Hadeed at his office in Port-of-Spain to discuss his transition back to private life, his thoughts on the insurance industry and whether he believes T&T has the wherewithal to emerge successfully from its current economic situation.
Straddling two worlds
On the September 4, 2015, Gerald Hadeed's tenure as Minister of Tourism came to an end. Having managed two ministerial portfolios and chaired a state board, Hadeed began the transition back into private life. Naturally, he went back into what he knows best: business. After all, being a businessman is in his blood.
His father, Aziz Hadeed, founded the Caribbean Insurance Company Ltd in the 1970s and, in 1996, Hadeed would rebrand the company as the Beacon Insurance Company.
Through his leadership and committment to his employees and customers, Beacon has grown to become a staple in the local insurance industry.
"I went into government to learn how a government operates. How they receive their income, how they spend their income, how they manage and how they balance competing interests," Hadeed said in a reflective tone.
"I've always been involved in politics but taking up a ministerial portfolio was a business decision to allow me insight into what the developments in T&T will be over the coming years."
When asked what he believes the Government can learn from the private sector, Hadeed said unequivocally, "Management," adding: "The Government needs to train its employees, government needs to respect its employees so that they can perform public service at the highest level."
Stating that his business is stronger now than when he left it, Hadeed made the point that good management and proper planning should be the basis on which government decisions are made.
"When I left (Beacon) and came back, the business grew, a testament to the quality of management in the company. If goverment adopted more business-like practices, things would be better."
Having been in the insurance business for over 40 years, Hadeed is of the view that the onerous regulations in the financial services sector, particularly for insurance companies, are leading to what he defines as a form of "financial recolonisation,"
"The colonial masters may no longer be physically here, but what is happening with many financial institutions is we are being recolonised by way of financial regulations.
"The new Insurance Act, and the burdensome nature of financial regulations is forcing us to do more reinsurance which reduces the pool of available capital to develop the domestic and regional insurance industry. More money is going out to foreign reinsurers who are returning to us only commissions. We (insurance companies) have absolutely no say in anything to do with our finances."
Asked about the heightened regulatory environment post-Clico, Hadeed sees the changes as analagous to "taking a sledgehammer to an ant's nest" describing Clico as one company that got into trouble, but all the other companies were meeting there regulatory requirements.
With the relocation of the head office of regional financial services group Sagicor from Barbados and the purchase of a large block of Guardian Holdings shares by National Commercial Bank of Jamaica (NCBJ), the insurance industry has been the subject of media coverage in recent times.
When asked about the industry consolidation taking place, Hadeed said this trend is likely to continue.
"More consolidation is likely to take place," he said. "Some small companies have already been acquired and a few others are likely to go out of business because of an inability to meet the regulatory requirements. I expect that when all is said and done, there may be about four or five companies left locally."
When asked if Beacon would consider being acquired, Hadeed said: "Beacon is not for sale."
The regional outlook
With branch offices in Barbados, St Lucia and Grenada and agents operating in St Kitts and Nevis, Dominica and St Vincent, Beacon has a solid regional presence in the insurance industry. However, close to 77 per cent of the company's revenue base is generated in T&T.
Hadeed is positive about the company's performance in the region.
"One has to remember that the islands have been quite depressed since the global financial crisis. Reduced spending on travel and even high oil prices had a material impact on the islands. We expect that business in these island will pick up in the coming years as the economies are starting to turn the corner."
The insurance industry and the recession
Commenting on the contracting domestic economy and the implications for the insurance industry, Hadeed said people tend to under-appreciate the value of their insurance policy in recessionary times.
"In a recession having adequate insurance coverage becomes even more essential although individuals tend to reprioritise insurance spend to the bottom of the list. My advice would be that nationals should look for the best value when purchasing insurance, and examine all possible ways of mitigating risk.
"For example, ensuring that your car and property are properly insured by making sure that both are examined thoroughly and having the risks completely evaluated and the necessary improvements completed."
Hadeed is also of the view that as times become more difficult, higher levels of malfeasance can be expected in the industry. "We foresee this time around that the level of fraud will increase both in terms of frequency and severity and will be much more sophisticated which will make it difficult to detect and resolve," he stated.
Hadeed does, however, believe that the insurance industry has a vital role to play in these times by maintaining levels of employment, offering fair prices and staying involved in community activities.
Hadeed pointed out that although most people may not recognise it, the insurance industry is heavily dependant on foreign exchange to meet its reinsurance requirements.
"Approximately 90 per cent of all property, contractors all risks, marine and catastrophe cover are done externally with reinsurers. Foreign exchange is required on a quarterly basis to pay reinsurers for these external risks. It has become very challenging to obtain foreign exchange from the banks to pay reinsurers.
"This situation cannot continue and the industry is hoping that the Central Bank gives priority to insurance companies to meet their deadlines as this may have far reaching consequences for the insurance industry if we continue not to pay on time."
Calling himself a "nationalist", Hadeed believes that his actions have demonstrated his committment to T&T. "I believe in my country, I love my country," Hadeed stated emphatically.
Comparing the challenges the country faces now with those in the 1980's, Hadeed remains optimistic about the nation's prospects.
"The 1980s was the first time that Trinidad experienced a downturn and this was after a very short period of accelerated growth. On this occasion, the downturn comes at a time when we have had a sustained period of economic growth and development which will offer a more solid foundation for the country to move forward. We should therefore be able to weather this storm a bit better provided that the resources are managed efficiently."