Home insurance policies

I refer to the article by Joseph D. Bugeja entitled Insuring Home Sweet Home Becomes Sour (December 31).

The correspondent made various allegations regarding Middlesea Insurance plc. The Data Protection Act and the Professional Secrecy Act preclude the company from discussing the detail of Mr Bugeja's case other than in a generic manner. We shall willingly contact Mr Bugeja to answer any queries he may still have after we outline the following points.

1. Middlesea Insurance has not removed the discounts on home insurance policies of all senior citizens (i.e. holders of Kartanzjan), as alleged. The company, which, incidentally, is the only insurer in Malta offering such a discount, has reduced the level of the discount because of the market situation. It is therefore not correct to state that following the reduction in level of discount, premiums have increased by 100 per cent.

2. While some of our senior citizen clients live in bungalows, the majority reside in flats, terraced houses and maisonettes. Their claims experience is similar to the claims experience most of the insured go through. For example, the September 15, 2003 flood did not discriminate on any age-band basis. Nevertheless Middlesea retained preferential treatment of Kartanzjan holders, continuing to discriminate - positively.

3. One of the criteria of insurance is the law of large numbers, whereby the premiums of the many pay for the claims of the few. Insurance rates are based on loss experience on a national basis as well as on the experience of the insured. The concept of underwriting takes into consideration the physical and moral hazards of the insured property as a whole, the level of exposure to risk and the pecuniary severity of risk should it occur, together with the steps taken by the insured to seek to mitigate the level of loss by installing risk improvements in their property. Premium rates are also determined by the cost of reinsurance protection purchased by an insurance company. Malta is exposed to certain catastrophe risks. There can be no question of discrimination in this matter.

4. It is incorrect to state that the Middlesea company representative did not keep his promise to reply to Mr Bugeja's letter. Following a telephone conversation, a senior company representative replied to Mr Bugeja in writing within 16 working days.

Middlesea Insurance, a company listed on the Malta Stock Exchange, is very well aware of its responsibilities towards its clients and shareholders. It is the board's responsibility to ensure that, by its operations, the company will not only endeavour to generate added shareholders' value but is committed to do so in a manner consonant with its corporate social responsibility.