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Insuring for the future

Insuring for the future

Chairperson of Bahamas First Alison Treco weighs up insurance industry prospects

The Bahamas Investor Magazine
February 16, 2019
February 16, 2019
Steve Cotterill

Having first arrived in The Bahamas from the UK in 1984 on a secondment with KPMG, Alison Treco has been at the forefront of the financial services industry in the jurisdiction for more than three decades. “When I first came here, it was only supposed to be for two years,” she says. “It’s been a lot longer than that.”

Having specialized in the insurance industry as an auditor covering life, health and property and casualty insurance, Treco has served as a director of Bahamas First Holdings Ltd since 2012; she has been chairperson of the board’s Audit Committee since 2012 and in December 2017 was appointed deputy chairperson. When Ian Fair, chairman of the insurance company for the last 19 years, announced his retirement last year, Treco was appointed as chairperson of the board and its subsidiary companies, effective May 25, 2018.

President and chief executive officer of the Bahamas First Group Patrick Ward said at the time: “Treco’s appointment is key to our maintenance of high standards of corporate governance, leadership continuity and succession within the board and its objectives. Her leadership and expertise have provided tremendous value to our organization over the years and, with her appointment, I believe we are well-positioned to execute on strategies to drive operational excellence, continued innovation and stronger earnings growth in the longer-term.”

Originally having “drifted” into accountancy, her interest in the insurance industry was piqued by its complexity. “It is a very different industry than most because of the risk element in pricing and how to balance risk and reward,” she says. “It is a tricky one, particularly when you live in a hurricane belt.”

Early years
Having studied in Buckinghamshire in the UK with a diverse cohort of fellow students, Treco set her sights on travel after graduating in accounting and financial management. “I had met many Bahamians and they told me how great their country was. So I turned down job offers in Jamaica, Australia, Hong Kong and waited for the chance to go to The Bahamas. Luckily within a few months an opportunity came up. It wasn’t a disappointment. It is a wonderful country in which to live and work.”

She arrived in a boom period for financial services in the country. “Growth in the 1980s was phenomenal in The Bahamas and KPMG accountants here were some of the best paid in the world. A lot of people were very jealous if you got a position here back then.”

So she stayed, and in 1993 Treco became a partner at KPMG Bahamas. In 2004, she decided to establish her own firm and in 2006 her business was merged into FT Consultants Ltd, which provides accounting, advisory and restructuring services to local and international clients. She is also a director of an offshore trust company, a listed company engaged in retail and franchise services, and a shipping company, as well as a trustee of the Governor General’s Youth Awards programme.

Challenging landscape
Since those early days, the financial services landscape has changed radically, with increased compliance and heightened scrutiny of international financial centres by global bodies such as the Organisation for Economic Co-operation and Development. “We are not alone in trying to survive the wave of compliance and the change of landscape. The Bahamas had to change, of course it did, but we have narrowed our focus too far I think compared to some other jurisdictions. We have concentrated on wealth management and high-net-worth individuals to the exclusion of developing other business,” she says.

To widen the net, particularly in the insurance industry, Treco says The Bahamas needs to change its regulatory mindset, increase flexibility and bring in expertise from abroad.

“We have to rid ourselves of the idea of protectionism. If you don’t bring in expertise, then you will drive the industries away. If you don’t have the industries then there will be nothing to regulate.”

One area where potential is not being fully exploited, she believes, is captives. “We have been talking about it for years, but we really need a push to bring captives here. We have the space and we are cheaper than places such as the Cayman Islands. We could set up back office operations in places such as Freeport and lure existing captives here. But we in the industry and in the government have to facilitate the move.”

According to Treco, the single most important thing The Bahamas can do to bolster the insurance industry, and the wider financial services sector, is to improve the ease of doing business. “This will take a re-education throughout the system and, as always, it has to come from the top.” To this end the government has been working with the Bahamas Chamber of Commerce and Employers’ Confederation to get insight into the hindrances of doing business in The Bahamas. “They are still in the information gathering process, but action is needed to fix the situation.”

There is also the issue of exchange control. In the insurance industry in The Bahamas, a lot of investments are in government bills, with some in equities, but all are domestic. “This puts us at a disadvantage in certain circumstances for example if a large hurricane or storm hits,” says Treco. “We would have to cash in investments and it would be hard to realize full price. It is short-sighted not to allow diversity in the investment portfolio and allow offshore investment by Bahamian companies.”

Areas of growth
Having said that, Treco is optimistic about the future of the industry. “We get consolidations from time to time across the industry but we have a very strong group of companies.”

Of course, The Bahamas is a relatively small island nation with a population of around 380,000, so the market is limited. One way to counterbalance this is to grow the range and diversity of products. “We can remain competitive by increasing our offering. For us now, for example, insuring against cyberthreats is a big area for growth.”

For The Bahamas to grow the market, says Treco, it has to look further afield. “I would like to see us expand beyond our borders to remain in control and grow. We need to be more competitive within the Caribbean region.” For that to be successful, The Bahamas needs to keep promoting itself on the global stage and capitalize on the trend of high-net-worth individuals to follow their money and make The Bahamas their home. “We are quite good at keeping the jurisdiction in mind internationally, but what we lack is a little bit of innovative thinking in our marketing,” she says. “Instead of following trends we need to be looking ahead of the curve. We need to be the frontrunners.”

In the wider financial sector, she says that one of the key strengths is the cadre of professional women in senior positions who help attract business to these shores. “We have a lot of very strong women in high positions in financial services in this country. Women in the industry are coming to the forefront. It is still somewhat of man’s world, but the perception is changing. Women think and speak differently and it is important to have that in your business at board level so you can look at things from different angles. And of course, women make up half of our consumer base so you would be foolish not to have insight from a female perspective.”

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