Shrinking market tightens competition in insurance

The once limited local market for the insurance industry shrunk further due to the closure of many businesses and the departure of hundreds of nonresident workers from the islands.

This scenario created a tighter competition in the insurance sector which now forces industry players to come up with better services, according to Commerce Secretary Frankie Villanueva.

The competition was made even fiercer by the fact that established players in the Commonwealth insurance industry have become better skilled and more focused on core areas, said Mr. Villanueva.

“There is much more competition now compared to the early days and you have to work harder now to maintain your position,” the commerce secretary who is also the CNMI insurance commissioner added.

This, even as the Insurance Commission of the commerce department recorded a decline in the number of insurers admitted by the government to transact business in the Northern Marianas between 1999 and 2000.

Government records disclosed at least 61 insurers were allowed to do business in the CNMI in 1999. This figure dropped to only 57 last year, with four companies folding up and one entering the market.

These insurers were authorized to transact property and casualty, life and health insurance, as well as surety and offshore surety.

Respective general agents for alien and foreign insurers, sub-agents, brokers, adjusters, and surplus lines were also licensed.

In a recent speech delivered before insurers, Mr. Villanueva added insurance companies must also adapt to technological advancements that have changed the way business is conducted.

Recent use of the internet to market and sell insurance products such as auto policies and life insurance have the potential to change the face of the insurance sector, he said.

Observers said the insurance sector would be the least affected of the economic crisis as it is among the few industries on the island which have kept a particular market, other than the tourists.

Existing Commonwealth laws require employers to provide their employees with worker’s compensation plan, and for this reason alone, the insurance sector will remain standing.

Although the insurance industry on the island still has a long way to go as far as professional development is concerned, the sector is doing fine and may hardly feel the pinch of the economic crunch.

Insurance is not dependent on tourist-related activities although the industry may also be affected by ongoing economic hardships since there is lesser hiring and a lot of companies on the island have resorted to retrenchment to tide them with the turmoil.

Existing laws guarantee that any employer who does not provide workers’ compensation coverage for their employees, even if the services are available on the island, are fined $100 a day.