The Bahamas Insurance Association believes that the accession to the World Trade Organization should not put domestic insurers at a disadvantage when compared to their foreign counterparts. 

Association Chairman Warren Rolle  said that the BIA does however support  the underlying principles of a free market economy.

“Currently general insurance intermediaries are required to be 60 per cent Bahamian owned. Whether this restriction under the WTO will continue remains to be seen. 

“The BIA has provided the government with a comprehensive position in relation to offers made on behalf of the industry and we look forward to further discussions in this regard,” The Chairman said. 

The Chairman further opined that insurers in The Bahamas are faced with what he is calling a major disrupter for insurers with respect to Value Added Tax.

Mr. Rolle said that after the implementation of VAT in 2015, the government and the Department of Inland Revenue    indicated that general insurance claim settlements were deemed to be inclusive of VAT.

As a result of this,  insurers were allowed these Input Tax Deductions to be offset against VAT collected and were to be made payable to the government.

“It is noteworthy that insurers advised the government on the day that it was reasonably foreseeable,  that following a major catastrophic event, significant credit would be owned to insurers following the settlement of claims. 

“Nonetheless, the government maintained its position and the industry proceeded with its remittance to the government on the aforementioned basis,” he said.

Following the passage of Hurricane Joaquin in 2015,  Mr. Rolle said there was no major impact to the insurance industry. After Hurricane Matthew in 2016,  insured losses were in excess of $400 million. 

After both hurricanes and based on the established VAT treatment accepted Inland Revenue, this event resulted in substantial credit owing to insurers.

He noted that some insurers continued to offset the Input Tax Deduction while others sought refund from the government. 

“General Insurers have recently received assessments from Inland Revenue  indicating that a substantial portion of the ITD  retroactive to 2015 is now disallowed as they were claimed on Non- VAT registrants. 

“This is a fundamental departure from the policy communicated to the industry and the practice that has persisted from the several years; resulting in significant sums being allegedly owed to the government,” said Mr. Rolle.  

The Chairman’s comments came in his address to the BIA’s 2019 insurance month official opening.