Unauthorised insurance company, broker refusing to pay over $17M to businessmen

Aug 28, 2022 News

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By Davina Bagot

Kaieteur News – At least two local businessmen are fuming over the non-payment of insurance coverage they secured by a broker operating in Georgetown and a New Zealand based company that is unauthorised to do business in Guyana.

Together, the two men who are tug and barge owners paid over $17 million to the insurers but have not received a cent after their vessels suffered damage.

Deoram Singh for example who is involved in riverine transportation said he has been paying an insurance premium for his tug and barge for over 20 years to Maritime Mutual Insurance Association, a New Zealand company. Singh was referred to the overseas insurer by Raj Singh Insurance Brokers and Risk Management Consultant Inc.

His barge was insured for US$450,000 and his tug for US$275,000. An additional liability coverage for US$5 million was also taken out by Singh to cover his operations. For approximately 20 years, Singh paid US$3,000 in premium for the tug he owns. In 2016, the businessman moved to insure the barge and started paying a premium of US$4,000 annually.

It was on December 23, 2019 that he encountered a major mishap while transporting sawn lumber along

the Essequibo River. Singh said he received a call from his Captain who indicated that the barge was leaking. Despite efforts made to salvage the barge, more water kept seeping in and the lumber being transported was lost in the process. He said that with assistance, the water from the vessel was pumped out the next day, after which some repairs were done to get it back to land.

Two weeks after the incident, Singh explained that the “royal run around” started. The insurance company, he said, sent a gentleman to inspect the vessel which had been transported to a site on the East Bank of Demerara to be repaired.

The businessman said for weeks and even months, the insurer kept requesting more and more documents which were provided but close to three years after, he is yet to receive a penny from the company.

He noted that US$243,000 was lost in cargo, while he received a quotation of US$375,000 to repair the barge. In fact, the businessman said he was sued for the total cost of the lumber he was transporting, while Maritime Mutual has been avoiding paying up any monies to him.  Singh told this newspaper that he has not made a report to the police as he is not confident in anything being done about the matter. The businessman said he was forced to repair his barge with monies from his own pocket to continue supporting his family.

Another businessman who is faced with a similar dilemma, Mr. Hardesh Tewari is not taking the non-payment of insurance he toiled to secure lightly. Tewari in an interview with Kaieteur News this past week shared his experience with the said insurance group.

He explained that it was in 2014 that he purchased a barge to the tune of US$800,000 while an additional cost of US$250,000 was charged to transport the vessel. In July of 2016, Tewari purchased two insurance policies. The first was for the hull and machinery valued at US$1 million and the second was for protection and indemnity valued at US$5 million.

The policy was enforceable for 12 months from July 15, 2018. An annual premium of US$13,500 for both policies was to be paid in quarterly installments of US$3,337.50. On October 10, 2018, Tewari said he received an invoice for the period October 15, 2018 to January 15, 2019 which was paid.

On December 9, 2018, just weeks before the premium expired, the businessman’s barge capsized while on its way to Georgetown from Saint Lucia. On board the vessel were mixed aggregates worth a total of $15.9 million.

Unlike Mr. Singh, Tewari could not save his barge. The vessel sunk and the businessman later moved to make a claim for his loss. He said that a claim of US$1 million was made for the vessel and additional US$151,000 for the cargo that was lost. The businessman was also seeking US$25,000 he was required to pay for labour charges.

Sharing a similar fate as the other businessman, Mr. Tewari complained that the insurance company pushed him around for several weeks subsequent to the claim being made.

The insurance company also offered him a settlement which was insufficient for the damage thus he turned it down.

After refusing to repay the businessman, Tewari turned to the local courts for assistance. This publication understands that the matter is presently ongoing.

According to the Court document seen by Kaieteur News, Tewari slapped both the local insurance broker and the overseas based insurance company with a lawsuit, seeking over US$4.6 million in damages and an order that the defendant account for all premiums and other payments received for both brokerage services and insurance policies. Tewari has also asked the Court for an injunction to block the local insurance broker from marketing, offering, soliciting, placing overseas insurance and receiving premiums and other payments in relation to insurance until the party becomes compliant with the Insurance Act 2016.

Bank of Guyana (BoG) Governor, Mr. Gobind Ganga told this newspaper on Saturday that the New Zealand based insurance company was not authorised to conduct business with Guyanese as its organisation has not met the required benchmark standards. In a letter seen by this publication, dated July 27, 2021, the BoG chief made it clear that the local broker was not licensed to place insurance business overseas.

Subsequently, the BoG in a bid to safeguard locals, published an advertisement in the daily newspapers indicating that the New Zealand based insurance company was not authorised to do business in Guyana. Moreover, the bank requested that persons who have insurance coverage with that group to contact the financial institution’s Insurance Supervision Department.

The businessmen, who spoke with Kaieteur News, believe that there may be scores of other victims like themselves.

Raj Singh denies allegations

However, the proprietor of Raj Singh Insurance Brokers and Risk Management Consultant Inc., Rajendra Singh, on Saturday told this publication that he is only aware of one client not being paid a claim, which he believes was denied for valid reasons.

Singh, who said he has been in the insurance business for over 39 years now, explained that in the matter which is presently subject to litigation, “his claim has been denied by the insurance company for valid reasons; he breached the policy conditions and that was the situation. The vessel was not authorised to carry cargo and he took cargo with it. He overfilled the vessel with cargo and it sank.”

The insurance broker explained that due to the matter being before the Court, he could not provide additional details.

He indicated that there have been customers of Maritime Mutual in the past that made legit claims and were paid. He recalled about “two or three” being settled.

So far, the insurance broker estimates that Maritime Mutual may have about two dozen clients from him. When asked why he gave business to that company, being cognisant of the fact that they were unauthorised to do business in Guyana, Singh explained that there are not many local insurance companies that offer comprehensive maritime policies.

“There is a very serious problem with marine insurance right now emanating out of Guyana. There are very few insurance companies who offer marine insurance. There are about three and they are very, very restrictive in what they can offer…with marine insurance, you cover your vessel and you also have liabilities for several other things like the crew could be injured, your vessel could hit into a wharf, it could hit another vessel or a bridge so the liability part of it could run into millions of US dollars,” he related.

As such, he noted, “There aren’t anyone in Guyana who offers full Protection and Indemnity (P&I) insurance and the Berbice Bridge requires you to have this insurance…so they cannot get it locally. So vessel owners come into us to do insurance but there is nobody locally that can offer the proper P&I insurance…so Maritime Mutual came in. The vessel owners in Guyana and the Caribbean got very older vessels and nobody in the overseas market wants to cover them.”

To this end, the insurance broker said Maritime Mutual was the only insurance group that was willing to offer coverage for the local offshore transport sector.

Singh made it clear, however, that since the newspaper publication from the BoG, his brokerage firm has not referred any business to Maritime Mutual.

 

 

 

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