The cut and thrust of the 2018 Barbados Election campaign has tossed up many issues which confirm the political party that wins the election will have to hit the ground running to rescue and restore the country to the pedestal it once occupied in the region and the world.
There is one issue which has not received the airplay it deserves in the opinion of the blogmaster.
On more than one occasion the leader of the Barbados Labour Party (BLP) – delivering on the 2018 election campaign platform – hinted at the fact should her party win the government, there will be an effort made to hold certain actors involved in the CLICO mess accountable. The blogmaster is aware promises made in the heat of a political campaign must be taken with some salt. However, given the black eye the CLICO collapse has given to Barbados, AND, the potential it poses to continue to deliver given its impact across the region, the blogmaster will continue to invite discussion on the matter in future blogs.
What the CLICO debacle exposed was that there was a catastrophic failure of the regulatory system- of which the political class and other key actors were complicit- to more efficiently manage the downside risk of the local insurance sector. An IMF report leaked in December 2017 identified the systemic risk posed by Sagicor – the dominant insurance player in the region – and the challenge posed to the local regulator (Financial Services Commission (FSC)) to effectively regulate given the complexity of Sagicor’s business model.
The IMF report found that the FSC, which was established in 2011 and is assumed to be the group supervisor of Sagicor, has neither developed, not implemented group-wide supervision processes and practices since its establishment.
It should be noted that to its credit the FSC was responsible for commissioning the report.
What has intrigued the blogmaster is the recent announcement that Sagicor acquired Harmony General insurance company. Harmony General was a small player in the sector, however, if the size and complexity of Sagicor was identified before the acquisition as a source of concern in the IMF report- the acquisition will serve to add a few more questions.
The blogmaster has no interest in the sale directly, it is more a quiet concern about how the sector is being regulated to militate against a recurrence of a CLICO. The NEW leadership of Barbados must demonstrate firm leadership to implement learnings arising from the collapse of CLICO. We must punish those who failed to honour fiduciary responsibilities. In this regard we have taken careful note of the lead role being played by Leslie Haynes Q.C. in BLP affairs. You may recall Haynes was very close to Leroy Parris and CLICO before its demise.
The blogmaster has also observed – lost in the din of the 2018 general election – general insurance companies have been disclosing end of year financial statements as required by law. A perusal of ALL of the finacials published so far list companies under financial stress. What is not clear to the blogmaster is how a sector that is under ‘financial pressure’ has not seen the urgency to significantly raise premiums to bolster the profit and loss. What is the blogmaster missing?
It is the expectation of sensible Barbadians the incoming government will demonstrate the leadership required to make available adequate resources to the FSC to do its job effectively. The other expectation is that players responsible for the CLICO collapse will do the ‘time’.
See the Financials of CGI, Brydens and Sagicor General insurance companies:-