GEISHA KOW­LESSAR-ALON­ZO

Se­nior Re­porter

geisha.kow­lessar@guardian.co.tt

The glob­al eco­nom­ic land­scape is cur­rent­ly de­fined by a high de­gree of un­cer­tain­ty, which is caus­ing a rip­ple ef­fect across in­dus­tries, in­clud­ing in­sur­ance. This un­cer­tain­ty may not just be a pass­ing phase, it can have a “crip­pling” ef­fect which can lead to paral­y­sis for busi­ness­es, con­sumers and clients alike and per­haps cause them to pause on in­vest­ment and ma­jor fi­nan­cial de­ci­sions.

This is one of the key take­aways from a for­mer deputy gov­er­nor of the Cen­tral Bank, Dr Ter­rence Far­rell, who was part of a pan­el which ex­am­ined how glob­al eco­nom­ic trends and geopo­lit­i­cal con­flicts are re­shap­ing Caribbean in­sur­ance.

The As­so­ci­a­tion of T&T In­sur­ance Com­pa­nies (AT­TIC) host­ed the pan­el on the first day of its two-day con­fer­ence, en­ti­tled ‘The New Risk Equa­tion: In­no­va­tion, Reg­u­la­tion, and Re­silience.’ The con­fer­ence took place at the Hy­att Re­gency yes­ter­day.

A sig­nif­i­cant source of this glob­al un­cer­tain­ty, Far­rell said, is the un­pre­dictable na­ture of US trade pol­i­cy.

The Trump ad­min­is­tra­tion has im­posed tar­iffs on near­ly every coun­try in the world, cit­ing emer­gency pow­ers grant­ed by a spe­cif­ic piece of US leg­is­la­tion. This move has been met with le­gal chal­lenges.

“The thing about it is that when you read the judge­ment of the US Court of Ap­peal and those four jus­tices, their ar­gu­ments are not triv­ial. So, I al­ways want to say to peo­ple is that do not ex­pect that when it goes to the Supreme Court that they will not al­low Mr Trump to con­tin­ue with his tar­iff­ing of coun­tries around the world and con­tin­ue to do it in that ar­bi­trary kind of fash­ion,” said Far­rell.

“And that is what is con­tribut­ing to the sets of pol­i­cy un­cer­tain­ty. It is what’s con­tributed to the po­si­tion, for ex­am­ple, of the Fed­er­al Re­serve re­duc­ing rates by 25 ba­sis points in a sit­u­a­tion where the out­look for the Unit­ed States is very, very murky. They don’t know what is go­ing to hap­pen. Eco­nom­ic growth in the Unit­ed States is slow­ing down. Un­em­ploy­ment is ris­ing. In­fla­tion has ticked up to over three per cent,” Far­rell ex­plained.

An­oth­er pan­elist, econ­o­mist, con­sul­tant and lec­tur­er at the In­sti­tute of In­ter­na­tion­al Re­la­tions, UWI, St Au­gus­tine, Dr In­dera Sage­wan, echoed sim­i­lar sen­ti­ments, agree­ing that “clients are go­ing to pause.”

“Be­cause if you’re un­cer­tain in terms of what’s go­ing to hap­pen, you are go­ing to look at your pock­et, you’re go­ing to look at the mon­ey that you have avail­able to you, and you will now be mak­ing de­ci­sions in terms of how do you al­lo­cate it. You will think about, for how long, for ex­am­ple, do I an­tic­i­pate this pe­ri­od of un­cer­tain­ty to last be­fore there’s clar­i­ty? If I an­tic­i­pate it’s go­ing to last for one year, two years, then I am go­ing to act in a way to en­sure at the end of the day that my ba­sic needs are met. I’m not go­ing to put mon­ey in ar­eas that I don’t deem as nec­es­sary,” she stat­ed.

Sage­wan ob­served that across the re­gion, in­sur­ance con­tin­ues to be per­ceived as a nec­es­sary evil by con­sumers—whether they are in­di­vid­u­als, busi­ness­es or gov­ern­ment en­ti­ties.

She ex­plained that this per­cep­tion stems from the na­ture of in­sur­ance it­self: “It’s mon­ey that you’re spend­ing reg­u­lar­ly, yet you may nev­er re­ceive any­thing in re­turn un­less you have cause to make a claim. That’s the re­al­i­ty.”

Sage­wan al­so links the de­cline in life in­sur­ance up­take in T&T di­rect­ly to the coun­try’s eco­nom­ic stag­na­tion, stat­ing that the coun­try has ex­pe­ri­enced neg­a­tive growth for nine years, which has se­vere­ly con­strained peo­ple’s dis­pos­able in­come.