Today in the House of Assembly, Parliamentarians approved three insurance sector and related bills, effectively passing the ***Insurance Amendment Act 2009***, the ***Companies Amendment Act, 2009*** and the ***External Insurance Act, 2009*** to reform the domestic and international insurance industries.
The Insurance Act was passed in 2005 but not brought into effect, pending the appointment of a Commission and Regulations. Indications are that as soon as the amendment bills pass through this parliamentary process, the Act will be brought into force. The Rt. Hon. Hubert A. Ingraham, Prime Minister and Minister of Finance noted that the Regulations have gone through an extensive consultative process with industry.
During the House Debate, it was pointed out that the Insurance Commission to be appointed would not be an “appendage” of the Ministry of Finance. Instead, that office is expected to become an independent autonomous agency, that will also have the means to obtain its funding separate and apart from the regular budgetary exercise.
The Prime Minister said *”The new legislation will require enhanced capital and solvency requirements and qualifying assets as defined in the law. This will ensure that companies maintain quality assets in support of their quality liabilities. And, it will require all insurance companies to have assets placed in a statutory fund; that is a fund that is controlled by the State. And even if something happened to the insurance company, there will be a fund to which resort can be had to cover certain specified liabilities.”* The Act would also ensure that the commission has greater control in monitoring changes in company ownership; effectively, the Regulator will have to be notified if 10% or more of a company’s ownership changes. Insurance companies are required to publish balance sheets and financial statements on a regular basis.
Speaking specifically to policy holder risks, the Prime Minister said the proposed legislation would put in place mechanisms to ensure that the Regulator is able to intervene easier and far more speedily when it appears that policy holders might be at risk. *”A number of alternative means of intervention is required,”* he said. *”At the moment the Registrar is limited to having to place a company into liquidation. That may be an option that may be exercised, but there are other things that can be exercised prior to such a decision being made.”* The Act is designed to enable the Regulator to appoint a statutory administrator for the management and control of a company immediately – without reference to a court – under specific circumstances that include assets falling significantly and a company’s inability to meet financial obligations.
Lennox McCartney, the Registrar of Insurance Companies, maintains that the legislation goes a long way in positively impacting the local industry. *”We think these amendments are very important moving forward in the regulation of insurance companies.”*. While there are no guarantees with regard to companies and their performance, he feels the legislation provides the tools to the regulator to monitor and supervise these companies.
He described the new External Insurance Act, as an important piece of legislation that will change the regulatory framework for external insurance. *“It will have a positive impact on the offshore financial services side of the industry because it will provide, in fact, a better framework – a more modern framework that meets international standards – and also more flexibility in designing products and services to the international insurance business,”* Mr. McCartney said.