Page 31 - IB June July 2024

Insurance

A personal care assistant from Solomon Islands provides support to a patient. Photo: Pacific Australia Labour Mobility Scheme Facebook
THE PERILS OF UNDERINSURANCE

By Kite Pareti to $1.1b, an increase of $731m, representing an average
compounded annual growth rate of 8.4%,” Nacola noted.
Underinsurance and the unawareness of insurance remain “The portfolio has been strategically diversified across
significant challenges say insurance providers in Fiji and the various asset classes, to balance risk and ensure sustainable
Pacific. returns. It has been meticulously crafted to ensure that if one
Chief Executive Officer of Capital Insurance in Fiji, Tonga, asset class is adversely impacted, the overall portfolio is still
and Vanuatu, David Ariff Chan, said many individuals and able to grow and provide good returns to our policyholders
businesses in Fiji are either underinsured or unaware of the and shareholders,” he added.
full benefits of insurance which can “leave them vulnerable to Nacola acknowledged that when tourism had a downturn
financial shocks in the event of unforeseen circumstances.” during the COVID-19 pandemic, BSP Life’s assets in that
Recent data from the Reserve Bank of Fiji shows only 15% of area were adversely affected. However, he says, other
adults in that country have access to some form of insurance. assets including properties, other private equities, offshore
Similarly in Tonga and Vanuatu, only 10% of Tongans are investments, fixed income, and other broad investments,
insured while Vanuatu’s total insurance coverage remains at performed favourably, “allowing us to still deliver value
5%. during a challenging period.”
“One of the key challenges in developing economies is the An example of this is Richmond Limited, a joint venture
widening gap between the economic value of assets and their partnership between BSP Life and Fiji Airways, under which
insured value. As these economies grow, with urbanisation the Sofitel Fiji Resort & Spa operates.
and rising asset values, this gap may increase. The lack of Nacola noted: “While borders were closed over the COVID
awareness about the benefits and importance of insurance period, we [BSP Life] invested $45m in a major refurbishment
may contribute or exacerbate this,” said Chan. program that then leveraged the high demand coming through
He noted the importance of partnerships with other when borders reopened. This same partnership has embarked
organisations as a way “to create an ecosystem that promotes on a new hotel development called Vatu Talei, co-located with
financial literacy and awareness. Through these partnerships, the Sofitel on Denarau, with an investment of around $230m.
we can work together to provide affordable and accessible This is a high-end luxury hotel that will support new growth in
insurance products to a broader audience,” he added. our tourism industry.” The hotel is expected to open in 2026.
BSP Life’s Investment Portfolio (IP) has evolved over the Another example is BSP Life’s divestment of 40% shares in
years due to strategic partnerships. Managing Director, Future Farms Pte Limited (trading as Rooster Poultry) to FNPF.
Michael Nacola, said the company’s IP has almost tripled since “Our medium-term focus on investments is to grow the
2010, making it the second-largest institutional investor in Fiji portfolio to $2 billion, whilst prudently managing risks, and
after the Fiji National Provident Fund (FNPF). maintaining strong returns for policyholders,” said Nacola.
“Over the last 13 years, our IP has grown from $369m The BSP Life Managing Director says the company is a

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