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Question For The Supervisor Of Insurance – Are All Insurance Companies Equal?

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The CLICO challenge remains. The former Acting Prime Minister Fruendel Stuart promised Barbadians to expect an announcement on the matter soon. Minister of State in the Prime Minister’s Office Darcy Boyce signalled in a press conference recently what maybe in the offing for CLICO investors. He suggested Barbadians who invest in financial products out of sync with the market should be prepared to accept the attendant risks. We are paraphrasing.

A discussion point in the CLICO Saga has been the role of the Office of the Supervisor of Insurance. All are agreed several months into the CLICO crisis that the Office of the Supervisor of Insurance fell asleep at the switch. There is no excuse to offer.  The Insurance Act empowers the Supervisor of Insurance with wide ranging  powers to act decisively in situations which demand it. The CLICO matter exposed a very high level of incompetence. The first line of oversight is the Office of the Supervisor of Insurance, closely followed by central government through its agent the Permanent Secretary in the Ministry of Finance and the Minister responsible.

Of concern to BU is the lack of ongoing public discussion regarding the role of the Office of the Supervisor of Insurance in the wider context. Yes we have the CLICO challenge but are we confident the insurance sector is being efficiently regulated by this office?

The Financial Services Commission (FSC) is in the pipeline, it is designed to regulated the credit unions and insurance sectors. Until the FSC is established, do we have a comfort level that the Office of the Supervisor of Insurance has the capacity to do the job? Bear in mind the Supervisor of Insurance continues to have legal oversight for CLICO. Do not forget that the insurance sector in Barbados is comprised of several insurance companies. In light of the falling asleep at the switch by the Office of the Supervisor of Insurance, what confidence can we reasonably  expect to have in that office?

An issue coming out of the recent sacking of Marilyn Rice-Bowen from the National Housing Corporation (NHC) is to question how government contracts are awarded to supply insurance services.  There is the distinct impression from the crosstalk that the key measure used to select insurance companies for government business in Barbados is driven by cronyism and price*. BU should issue a disclaimer, we are not in the insurance business but here is what we know – not all insurance companies are equal.

The financial health/strength of an insurance company will determine the amount of reinsurance it buys.   There is a minimum buy rule which the Office of the Supervisor of Insurance mandates. The question to be asked is whether the government should be giving business to those insurance companies which are operating at a minimum buy level, in Barbados parlance, ‘hand to mout’.   Providing insurance coverage for government assets is serious business. The award of contracts for government business should not* be based on the lowest price or cronyism.

The Insurance Business Model:

Profit = earned premium + investment income – incurred loss – underwriting expenses

Source: Wikipedia

The rebuttal to BU’s position by some will be if a company is licensed to operate as an insurance company in Barbados, it should be equally considered to underwrite government business. BU’s response, not all insurance companies are equal.

Caveat emptor!

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13 responses to “Question For The Supervisor Of Insurance – Are All Insurance Companies Equal?”

  1. David Avatar
    David

    Who is the current Supervisor of Insurance?

    When is the FSC slated to be rolled out?

  2. Donald Duck Esq, Avatar
    Donald Duck Esq,

    What has happened to the 2008 financials of clico life that were recalled. Have new ones been issued?

  3. David Avatar
    David

    It has been reported in the news that the Prime Minister will be addressing the nation on some key matters soon, CLICO must be one of those issues.

  4. Avatar
    Anonymous

    This comment is kind of off topic, but I couldn’t find any where else to put it. Here are a couple of questions I saw today in another place put by a well-respected journalist. I believe they are valid questions

    “Is the PM’s return to work sanctioned by his doctors, should it be – and do we have a right to know? Does this (his return to work) mean he is getting better (if so, may he continue to improve) or should we care? This isn’t a question for reporters – this is a question for a people and their leader. Over to Wunnah the People. Do YOUR job.”

  5. David Avatar
    David

    @Anonymous

    The short answer is yes the people need to know if the PM has medical clearance for all the obvious reasons..

  6. Crusoe Avatar
    Crusoe

    Re ‘Question for the Supervisor of Insurance’. Is there currently a Supervisor of Insurance?

    Re ‘Is the PM’s return to work sanctioned by his doctors, should it be – and do we have a right to know? Does this (his return to work) mean he is getting better’

    Of course, his return to work, as a responsible statesman with the reins of Government, accepting the role again, indicates that he is indeed well and fully capable of all the responsibilities therein.

    It goes without saying, not so?

  7. J Avatar
    J

    Crusie wrote “Of course, his return to work, as a responsible statesman with the reins of Government, accepting the role again, indicates that he is indeed well and fully capable of all the responsibilities therein. It goes without saying, not so?”

    No Crusoe. It does not go without saying.I have returned to work when both my doctor and I felt that I was good to go and ended up making half a dozen of my colleagues sick as dogs.

  8. Crusoe Avatar
    Crusoe

    @J

    Words sometimes have various levels of meaning.

  9. Been in town too long Avatar
    Been in town too long

    I know that there are number of Barbadians who believe that our Prime Minister’s health is none of our business. I am in complete disagreement with this point of view.

    This is a man who is to all intents and purposes responsible for the 280,000 odd souls who live here. I think I have a right to know whether he is fit and well, both mentally and physically to determine my future.

    At such a critical time for our country I need to be assured that our Prime Minister is capable of being on the job 24/7 because that is what it will take to get us out of this mess.

    Given his appearance on his arrival home I have serious doubts that he is up to the task. So what I have to ask myself is in whose interest is he acting – his own, his party or the country. I for one will feel terribly let down and cheated if in another few months he resigns due to ill health. It will say to me that he did not respect me enough to believe that I would form a judgement about this behaviour. I am not some pawn in a political game.

  10. The People's Democratic Congress Avatar
    The People’s Democratic Congress

    It dismays us to read the foolishness that Mr. Tennyson Beckles, so-called economist, former Personnel Manager at Bank Beweries Ltd, wrote in his piece in the Barbados Business Authority, Monday, August 30, 2010.

    Indeed, Mr. Beckles wants those persons who would have read his article, to wrongly believe that governments undertaking Neo/Keynesian expansionary fiscal policies can one and at the same be juxtapozed with these same governments’ providing of social services public goods to citizens in the country.

    Mr. Beckles must be told that he is writing absolute crap in the people’s newspaper.

    Therefore, those who might otherwise not be learned enough in the philosophical disciplines from which Mr. Beckles is spewing out such nonsense, and who – quite unfortunately – therefore might otherwise be terribly misled by some of the things that he has written in this article, must be told that whereas Keynesian economics deals with government’s use of fiscal and monetary policies to jump start the economy during recessionary conditions, or better yet, to reduce unemployment in the country by increasing government spending and thereby increasing aggregate demand, the government’s provision of social and public goods is to make sure the public, esp. certain poor and vulnerable groups in society, is able to access basic amenities at greater convenience and advantage to them ( the public) than those which would otherwise be provided by private enterprise in respect of the maximization of profit and in respect of the pursuance of the fulfilment of corporate-interest.

    Whereas too the former has had its roots in the late 30s, 40s and 50s in the West, and has been a partial rejection of free market economic policies (partial acceptance of Keynesian economic policies), the former has had its roots long before the time of the coming about of Keynesianism (impossible to say exactly when), and has been a middle course between a nearly full fledged private enterprise system (a pure capitalism model – impossible in reality), on one hand, and a nearly full fledged public enterprise system (a pure socialism model – impracticable in reality in the long run ), on the other, (and in later times, i.e. the later stages of the 19th Century and throughout the 20th Century up to now, it would have been best illustrated by the existence of the welfare state in the UK, France, Germany, Norway, Sweden, etc. and by also the so-called mixed economy.

    Hence, his view that “today, as in all other periods in history, the economies in which laissez-faire practices dominate are dying slowly from the germ of their creation, greed, while in countries where there is some measure of CENTRAL DIRECTION and SOCIAL ENGINEERING, economies are prospering”, is absolute rubbish, since no matter what ideological political financial material systems within which goods and services are produced and distributed in a country (space), a so-called economy always grows in absolute terms, year after year, until whenever the wider ideological social political system dies or is killed, and is taken over by another political economic system – never the economy first; and is a sour non-point too since all so-called economies contain various degrees of laissez-fairism, capitalism, socialism, centralism and welfarism.

    Therefore, the latter makes it impossible to state – without providing real evidence of, say, a different ideological political material financial system taking over the present American ideological political material financial system, or taking over the present Euro-centric Western dominated global ideological political material financial system – that the Chinese economy is prospering whereas the American economy is dying, or that the Chinese economy, which is part of the same existing Euro-centric Western dominated global ideological political material system that America is a part of, is prospering whereas the American economy is dying.

    What disappointing stuff of the highest order!!

    What this DLPite should have instead been focussing on is the extent to which both Keynesianism and Monetarism have led to massive catastrophic failures in the material production and distribution and financial processes of many countries in this world, and on the extent to which we in Barbados can develop our own constructive theoritical paradigms and practical solutions that, when properly implemented, will help make sure that so-called booms and busts are things of the past for a country like Barbados, and that will help point consistently to the best combinations of public and private sector ownership and control of the means of production and distribution of goods and services in Barbados.

    PDC

  11. anonymous Avatar
    anonymous

    @The People’s Democratic Congress | September 1, 2010 at 1:17 AM
    who’s writing for you? A sentence should be at least 2 lines – your sentences are at least 17. this is ridiculous. are you to be taken seriously? stuuuupes.

  12. David Avatar
    David

    @J

    Based on your comment it appears that you are unaware of really how this matter is really playing out. Unless you are fishing?

  13. Lloydsman Avatar
    Lloydsman

    Someone asked “Is there currently a Supervisor of Insurance?” The answer is yes – the much maligned Carlos Belgrave, who despite being largely responsible for the Clico mess in Barbados appears to have retained his job. This man is not fit for purpose – much needed amendments to the country’s insurance legislation are still pending after a number of years, making Barbados a laughing stock. Even far smaller Caribbean insurance markets now have better standards of supervision.

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