What is of even greater significance is how we will respond to the revelations from a policy perspective. What are the changes that will be made to ensure that the same thing does not happen again or that there is reduced risk of its recurrence? – Mariano Browne
The quote by former CEO of a CL Financial subsidiary and minister in a T&T government is insightful. Political junkies become mired in ‘CLICO personalities’ but BU insists we should focus on the catastrophic failure of the regional regulatory framework to alert the market that something was amidst at CL Financial. Three years after the collapse of CLICO and there is still doubt that any serious regional regulatory framework has been established to prevent a recurrence. In every territory that CLICO operated in the Caribbean there was a predictable response by the regulatory body. What does it tell us?
It must be stated that Barbados has moved quickly to establish the Financial Services Commission (FSC) with the objective to strengthen the regulatory environment relating to insurance, credit unions and functions administered under the Securities Act. In the case of the insurance sector, the office of the Supervisor of Insurance (SOI) was woefully inadequate and it is God’s mercy we have not experienced more failures in the industry. In fact under the watch of the SOI CLICO Barbados accumulated a short reserve position which started in the boom years under the Arthur administration.
FSC, Programme Manager, Ashley Bignall is quoted as saying “the objectives of the Financial Services Commission are to efficiently regulate the non-banking financial services sector; while promoting greater public confidence both in the supervision of the non-banking financial services sector and in the operations of financial institutions.” This is a very important statement post-CLICO and one which we hope the FSC can deliver on. A good place for the FSC to start is to investigate why several of our insurance companies have not published current financials?
Where are the financials for CGI for example? Is it true that its performance for 2010 was dismal? This insurance company started its operations by offering low-rate policies and has enjoyed enormous popularity as a result. However if we are to judge from feedback, CGI’s rates now rival and surpass competitors in the market. This is a sure sign that it has changed its strategy to win business. The question is why. It seems policyholders are being asked to pay higher premiums while the principals and directors of the company enjoy luxury vehicles, acquire plantation houses, play polo among many other luxury benefits. Yes investors are entitled to enjoy the sweets of their investments however the public is also entitled to protection under the law by expecting timely posting of financials.
Let us show some intelligence by demonstrating that we have learned from the CLICO mess. Is it reasonable to ask the FSC to declare to Barbadians that it is satisfied with the management of all insurance companies in Barbados? If the FSC is not satisfied what action is it prepared to take to protect Barbadian investments? We want to know about the health of Cooperative, CGI, Equity and Trident insurance and all the other insurance companies which are not A.M Best rated. Barbadians should force the issue by doing business with A.M Best rated insurance companies only.
It would be nice to hear from the FSC.