A.M. Best Headquarters

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.

27 responses to “Another CLICO Mess On The Horizon Maybe?”

  1. Caswell Franklyn Avatar
    Caswell Franklyn

    It would also be nice to compare the list of persons on the board of the Financial Services Commission with a list of persons who were directors of CLICO: then see if any of those persons would have appeared on both lists. The answer might shock you.


  2. @Caswell

    Can you list the board members for us?

  3. Douglas Trotman Avatar

    These are interesting times!


  4. […] that any serious regional regulatory framework has been established to prevent a recurrence”: Barbados Underground is concerned. Tweet “Three years after the collapse of CLICO and there is still […]


  5. Mariano Browne did NOT write that piece for the Express, nah… That piece was written by a very knowledgeable, insightful and genuine individual who would never be caught up in Clico subsidiaries, governments or political scandals.


  6. Is it not interesting our media would report that REDjet is having financial issues and as a result has to cut back flights to certain destinations?

    On the flipside we have insurance companies which are not adequately supervised and in some instances performing badly and not a word.


  7. Douglas Trotman

    Times were interesting from the time de Bible get write …!

  8. St George's Dragon Avatar
    St George’s Dragon

    I can’t find a website for the FSC, which is an indictment in itself but from a bit of Googling I think following is correct:
    Chairman of the Commission – don’t know (was Sir Neville Nicholls but he resigned).
    Deputy Chairman – Professor Frank Alleyne (replaced Sir Harcourt Lewis in April 2011?).
    Chief Executive Officer – Ian Carrington.
    Programme Manager – Ashley Bignall.
    Other than this. I can’t find any details of the other Board members in what I think is a 7 person Board.
    Also, why so many high-ups leaving even before the FSC has really opened its doors?


  9. Jeff Cumberbatch who would comment on BU from time to time is also a member of the board.

    You are correct that such an important body must have a website in 2012.


  10. St George’s Dragon

    When people enough were leaving the FTC including a Government/Cabinet Minister, the likes of Neville Nicholls signed up. Now this man also Chairs the Securities Exchange Commission. If it is that he resigned from the FSC it would have to be because of health or some related consideration, that’s all… no real lost!


  11. @BAFBFP

    You don’t follow the news? Nicholls retired recently and the farewell function was publicized in the press.


  12. @David

    I just changed insurance from cgi, not because of the cost, but because of its managment ethos. Imagine being dictated to where you should get your car repaired, having to pay vat to a vat registered company and then having to go through the process of reclaiming the vat after your repairs have been completed, or being dictated from among which compamies you can hire a car in case the need arises.

    The company needs to revisit its business model, else it will continue to lose business. I dont know if I agree with you David that its premiums are higher than the othe insurance companies. Recently i switched and paid $130 MORE in premiums. My action was not because of the cost, but because of of its policies with its customers. The cost would have been greater at the other insurance company, had I not negotiated for a deduction on the premis that I will tranfer all my business and family buiness to the company as each policy is up for renewal.

    To be honest David, because of the nature of our society, business develop a market introduction strategy by entering the marketing a a lower cost to establish it self and subsequently increase the prices when it is satisfied that its has captured a share of the market, it will eventually increase price as it would have relied on its customers loyaly and remwmber there is a lot of information sharing in Barbaos. I do not beleieve that market forces operate in this small society, look at what happens in the distibutive sector, where market seems to be abritary.

    I was under the imprssion that interlocking directors was a thing of the past, that was a hot debate in 1980’s when professor fought the then Barbados Mutual and it was found that there was the prstice of interlocking directorship within the business community in Barbados. Are we saying that the gove is adopting this strategy, and did it just start? or both administration prastice it. I invite Mr. Franklyn to show where it has occured under both administration.


  13. The above is from Bllogger2012


  14. @ Blogger2012

    I just voted on your above comment. What scares me even more is when senior Civil Servants like PS’s retire and find their way onto private sector boards …! The PS of Finance now retire … I holding my breath.

    @ David

    You got me … You does read EVERTHING… I am not so inclined ..!


  15. Ian Carrington, the CEO of the FSC, was the Registrar of Insurance several years back. The operation was a complete mess, and he ran it in a veil of secrecy – no transparency whatsoever. Any Regulator worthy of the name now has a website – Jamaica and Grenada to name just two.

    The FSC has been “opening its doors” for more than a year now. Wismar Greaves has just retired from ICBL, and has been a Registrar in the past – if no one else is capable, give him the job…..


  16. Caswell are you talking about Dr Frank Alleyne who was a former CLICO director? So was Tony Marshall the current Chair of the NIS, so was Hilary Beckles and many others. What is your point?

  17. Caswell Franklyn Avatar
    Caswell Franklyn

    When all the misdeeds were taking place at CLICO, Dr. Frank Alleyne was a member of its board of directors. Now as Chairman of the Financial Services Commission he would be charged with cleaning up and regulating the sorry mess that CLICO has become. This appears to be an example of a classic case of conflict of interest. That is my point.

  18. Random Thoughts Avatar

    Ahh!!! the Minister of Finance (Barbados) is saying on VOB now that the regulators in the Caribbean are responsible for the failure of CLICO.
    The Minister is wrong, wrong, wrong.
    CLICO failed because the principals of CLICO and their friends/protectors were stealing or benifitting from the stealing of the the policy holders money. Lest we forget it was Leroy Parris who said of David Thompson “The Prime Minister is accustomed to living large” that was at the time CLICO gave David Thompson a lift to Trinidad on CLICO’s plane.
    Why the hell couldn’t Thompson take LIAT or Caribbean airways like everybody else?
    My question then and now is where was this living large money coming from?
    Now we know.
    The principals have not yet been prosecuted because to quote Freundel Stuart “Leroy Parris is my friend”
    Leroy Parris is/was also the friend of the late PM David Thompson and was perhaps his lodge brother as well. I wonder is Freudel and Chris are his lodge brothers also. Is Leroy Parris also the friend of Mara Thompson the Member of Parliament for St. John and the widow of David?
    For example if the regulatory framework at my house is not strong enough and a burglar comes in is it my fault? Should the police charge me for having a “Not strong enough door (sorry strong enough regulatory framework).” Stupse!!!! Or correctly I should be able to leave my house open 24/7
    CLICO failed because the principals of CLICO made deliberate decisions to disobey the commandment which says “THOU SHALL NOT STEAL”
    Some of our officials need to go back to Sunday school. There they will learn excellent lessons for life such “Thou shall not steal” and “THOU SHALL NOT BEAR FALSE WITNESS”
    And maybe in future elementary school teachers who put their gratuity in HONESTLY run financial companies will be able to get their money back with interest.
    But maybe it will mean that Cabinet Ministers and Prime Ministers will have to choose their friends carefully. Maybe it will mean that they simply have to buy a ticket and take a commercial flight like everybody else.
    Maybe Prime Ministers in a country as small and as poor as Barbados cannot afford to live large.


  19. KHL “TONY ” MARSHALL WAS, I BELIEVE ON THE BOARD OF BOTH CLICO AND BAICO. A CAREER BANKER. A LIFE SPENT IN FINANCE. WELL EXPERIENCED. BUT MR MARSHALL RESIGNED / DESERTED BOTH BOARDS AS A DIRECTOR WHEN PROBLEMS BECAME PUBLIC.

    MR MARSHALL IS NEVER THE LESS CHAIRMAN OF OUR NIS FUND!!.

    BILLIONS OF DOLLARS IN INVESTMENTS….A BIT LIKE CLICO AND BAICO. WHILE AS CHAIRMAN OF NIS FUND THE NIS RECOMMENDED TO THE MINISTER THAT THE NIS NOT INVEST IN THE FOUR SEASONS PROJECT.

    SOMEHOW I FIND IT VERY SURPRISING THAT MR MARSHALL REMAINS AS CHAIRMAN OF THE NIS FUND; THAT HE DID NOT RESIGN. I SAY THIS BECAUSE ;

    A; THE ACTIONS OF THE BOARD OF DIRECTORS OF BOTH CLICO AND BAICO MUST COME UNDER SCRUTINY; UNLESS THERE IS TO BE EVEN MORE OF A BIG COVER UP FOR FRIENDS OF THE POLITICAL RULING CLASS….THE NEW PLANTOCRACY;

    B; WITH THE HUGE FAILURE OF CLICO AND BAICO, WHO ON EARTH COULD HAVE ANY CONFIDENCE IN THOSE INDIVIDUAL DIRECTORS, UNLESS THEY ARE ON RECORD AS HAVING DISSENTED FROM THE DECISIONS OF THE BOARD. IT IS TO BE HOPED THAT THE DIRECTORS WERE RESPONSIBLE; AND NOT MERE PUPPETS???;

    C; THE MINISTER OF FINANCE HAS OBVIOUSLY OPENLY EXPRESSED NO CONFIDENCE IN THE CHAIRMANS RECOMMENDATIONS NOT TO INVEST IN FOUR SEASONS;

    BASED ON THE ABOVE……HOW CAN THE MINISTER RETAIN MR MARSHALL; ………….AND HOW CAN MR MARSHALL CONTINUE ANSWERABLE TO A MINISTER WHO HAS NO CONFIDENCE IN MR MARSHALL OR HIS BOARD?


  20. Surprising coincidence we have Tony Marshall who is Chairman of NIS and former CLICO director and Jepter Ince, parliamentary Secretary and Senator and former Executive of ClICO who headed their Balanced Fund.


  21. to K H L TONY MARSHALL
    Mr Marshall.
    may i suggest that the Ex Directors of CLICO and BAICO who fled the Boards , resigned their directorships in such undignified haste, …..yourself, TONY ELLIS a chartered accountant ( ex managing partner i think of PRICE WATERHOUSE COOPERS ) who i think are / were the auditors of CLICO ? BAICO ( another remarkable coincidence!! ) LESLIE HAYNES a Queens ( really!! ) Counsel, SIR HILARY BECKLES, presumably a man of letters and superior to lesser mortals, a KNIGHT OF THE REALM God bless!!!, owe to the people of Barbados and the Caribbean an explanation why they resigned. IN SUCH HASTE. YOU MUST HAVE KNOWN WHAT WAS GOING ON!! if not WHY NOT SAY SO????? BFP……..there have been no further comments???? are you holding back on us?….our Minister of Finance has been very quiet of late?
    BFP….why not disclose all the other goings on and “connections” between CLICO and that attorneys office……and the DLP……i am sure you know what i mean???. …….what happened to the second part of the submission from SITGEE on the INNOTECH / BARBADOS WATER AUTHORITY SCANDAL?????…. ……….you been told not to embarrass the politocracy???
    SCANDAL?????……now what does the BARBADOS BAR ASSOCIATION have to say about these goings on of one of their honorable members?….and what of the BARBADOS INSTITUTE of CHARTERED ACCOUNTANTS?
    now before the spin doctors ( including my good friend Senator Gilkes ) and other pigs in the farm yard come out with more personal garbage directed against me, let me remind those animals wallowing in their own shit on our doorstep that there is a lot more to come on the DLP and CLICO…….you know what i mean…….hold your breath….
    ……and PLEASE…..LIMIT THE DEATH THREATS!!!…..they get boring after a while. and the gutless morons hiding in anonymity….come…..write under your name……..i will shortly identify you in any case!! BFP……you have removed some of the posts that were made on the INNOTECH / BWA blog……WHY??!!!!!…..Sincerely Chris McHale

    ex
    directors


  22. no more comments??????….i wonder why…
    Did Thompy put together the shareholding structure when CLICO “bought” what was the Holiday Inn.

    who were the two prominent professionals a prominent Q.C. and a Chartered Accountant who fronted for CLICO at that time to evade Property Transfer Tax……what did they receive?; how much?; in U.S. Dollars?…paid overseas.?? You all remember in that election years ago when the DLP had the Holiday Inn / Grand Barbados as their virtual H.Q.??…..how much did the DLP pay for those facilities……or was there a THOMPY TRADE OFF??


  23. From your statements “there is still doubt that any serious regional regulatory framework has been established to prevent a recurrence.” and “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.” it seems that you believe established businesses should not be allowed to fail. If so, that is completely anti-democratic and anti-free market, being completely prejudiced against new, small businesses. Businesses should be allowed to fail (particularly since the cause of fail is rebellion against bad practices/people not liking their services/products) and newer, better businesses should be allowed to rise up in their place. We don’t need regulation forcing businesses to all offer the same services the same way, as you yourself proved we have power saying “Barbadians should force the issue by doing business with A.M Best rated insurance companies only.” and thus don’t need government to dictate what services we get and how. What we need is to take responsibility for our decisions and choose companies that offer what we want, be it more safety and transparency or lack of it. We people sign contracts and make agreements with businesses and if we make an agreement where they can’t touch our money, just the interest, or have the original amount safe even if the company collapses, then great, but if we choose to do business with a company with the understanding all our money is fair game and at risk (for perhaps a cheaper price/more reward) then we can blame noone but ourselves for that choice. Actually the government rules regarding accounting make it so prohibitively expensive it’s no wonder any businesses can publish reports at all, and we can’t just do business with another government. We need to vote out the DLP and vote in a libertarian government that will lower the burdens of taxes, spending and regulation on the people and our businesses. Let people have a free market and decide for themselves what they want. DON’T HAVE GOVERNMENT DICTATE IT TO US, AND IF A BUSINESS DICTATES THEN CHOOSE ANOTHER COMPANY OR START YOUR OWN AS THEIR IS A MARKET FOR FREEDOM.


  24. @Justin Blade

    It appears from your comment that you have ignored the role of a robust regional regulatory body as it relates to pan Caribbean companies.


  25. @ David
    Not ignored. I simply repudiate the role of any regional regulatory body over our God-given sovereignty as individuals and as a nation. People are free to join and assemble into whatever bodies they wish but we have our own Constitution and all companies, individuals, organizations, regulatory bodies and our own government must obey it if they wish to operate within our country. No regulatory body can supersede our laws and, unfortunately, this body isn’t voluntary and private but clearly trying to act as an instrument of government as can be seen from the report on the Barbados Government Information Service website: http://www.gisbarbados.gov.bb/index.php?categoryid=15&p2_articleid=5951

    To quote:

    “he [Programme Manager, Ashley Bignall] also disclosed that the FSC had powers under the existing legislation to: conduct investigations into the affairs of any financial institution regulated under the Act; revoke or cancel licenses and take control of the management of any financial institutions as warranted.”

    To….”take control of the management of any financial institutions as warranted.”!!! Would you be eager to invest/start a business knowing government can take it away from you because they “aren’t satisfied with its management” or “feel it’s warranted”? And we expect locals and foreigners to?!?

    The Barbados Constitution, Chapter 3, 16.1 states “No property of any description shall be compulsorily taken possession of… except by or under the authority of a written law and where provision applying to that acquisition or taking of possession is made by a written law – a. prescribing the principles on which and the manner in which compensation therefor is to be determined and given…”

    Unless government is willing to purchase the company like any other individual / compensate appropriately then this is in clear violation of our Constitution and no such body can ever be allowed to violate our companies’ rights to Freedom, Existence and Right to Own Their Own Property, except where those companies are violating others’ rights to the same, without flying in the face of God and these natural rights we have as individuals both alone and together as any organization.


  26. The Way Forward :Steps to take Barbados Back on Track
    De-construct the Public Service
    De-construct the way we do business
    Get Serious about Mediocrity
    Strive for Excellence
    Construct that level playing field we hear so much about
    Focus on a new practice of Transparency
    Improve Government’s communication to citizens
    Practice the politics of Inclusion -not only party politics but across the board.
    Value your most important resource-the people
    De-construct the Common Entrance Examination
    Remove the stigma attached to certain schools
    Change the attitude of ‘older heads’ in society who are still colonial minded.
    Shape the attitude of the youngsters through rigid control
    Digest this for now
    More to come
    Do the suggested things


  27. @Justin Blade

    Surely you are being extreme?

    The FSC or any regulatory body will have to be guided by the same law you quote to justify action taken or face the courts?

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