business

Insurers concerned about profits

Claims rose 62.22 percent from January through June of this year as compared to last year.

Insurance companies paid $136 million in claims against $290.7 million in revenue in the first semester of 2008.

LA PRENSA

Coverage:Policy disbursements skyrocketed during the first six months of 2008. The amounts claimed for fire and theft, including bank robbery, were the highest.1051637

Because of increasing crime and infrastructure problems in the Zona Libre de Colón, many insurance company executives are worrying about shrinking profits.

Disbursements for covering theft and fire damages increased significantly during the first six months of 2008 as compared to 2007, not least of all because of the rising cost of raw materials and medical services.

Claims rose 62.22 percent in from January through May of this year with respect to the same period last year.

According to statistics provided by the Superintendencia de Seguros y Reaseguros, $136 million was disbursed to cover claims against $290.7 million in revenue during this period.

The number of payments made according to policy terms for coverage in most areas shot up, but those for fire and theft rose disproportionately, with increases of 920.23 percent and 525.89 percent respectively.

From January through May of 2007, claim disbursements for fire and theft barely exceeded $4 million, while disbursements for the same during the first five months of this year come to around $40 million.

The president of the Asociación Panameña de Aseguradores (Apadea), Mauricio de la Guardia, expressed his frustration with authorities who have done nothing to improve the hydrant system, conditions for the fire department and other infrastructure in the Zona Libre while time goes by, exposing insurers to the possibility of having to make good on even more claims and clients to business losses as well.

De la Guardia said there is no doubt that profits will be lower at the close of the first six months of the year, but he expressed confidence that the situation will improve in the following semester.

Gabriel de Obarrio, the manager of the Panama office of the Italian insurer Generali, noted that insurance companies are not the only businesses struggling with inflation, yet with the exception of fire coverage in the Zona Libre, premiums have remained the same. But, he said, if the current trend continues, the bottom line will take a big hit.