Jul 02, 2016 News
By Kiana Wilburg
Guyana’s insurance industry took a serious blow when the infamous CLICO disaster came its way. However, to prevent a recurrence of such financial whirlwinds, the National Assembly on Thursday passed a refined and strengthened Insurance Bill that is geared to protect the sector and restore accountability and transparency.
Taking the Bill before the House was Finance Minister, Winston Jordan. He acknowledged that the Bill was one which had its genesis with the former regime. He said that to his government’s credit, they had taken it to an advanced stage. He is proud that the new government was able to take up the mantle and bring it to its final stage.
In his introductory remarks, Jordan said that the Bill is crucial to the nation’s financial architecture as international consultants found that there were a number of gaps in the sector. These gaps included the lack of regulatory requirements relating to governance, lack of risk management guidelines, absence of minimum capital levels, weak supervision and the absence of information sharing.
The Finance Minister said that these gaps or loopholes are all closed with this refined Bill.
He noted, too, that the Bill seeks to align the industry with international best practices and is modified to take into account, the current development structure of Guyana’s insurance industry. Jordan said that the overall approach is to include risk based approaches consistent with sound business and financial practices.
The Finance Minister said that based on assessments by the World Bank and other international consultants, it was found that Guyana’s systems for monitoring the insurance sector were in some regard, primitive.
Jordan said that when the APNU+AFC took office, another round of consultations was held on the draft legislation in October 2015. After some amendments, the draft was then presented to stakeholders within the industry. He said that the final draft received the stakeholders’ blessings and it was subsequently sent to the Chambers of the Attorney General. He commented that the Bill is very comprehensive and committed it for passage in the House.
Following the Finance Minister’s presentation, several Members of Parliament gave their thoughts on the Bill.
Leading off from the Opposition’s corner, Irfaan Ali sought to make a case for the Bill’s passage to be put on pause and instead, be sent to a special select committee. He contended that the Bill consisted of a number of irregularities and oversights.
The Opposition member said, “We have to ensure that this Bill allows the local insurance companies to have fair competition alongside larger companies that are now coming in. Those things have to be taken into consideration and we have to ensure that the adjustments are as smooth as possible.”
Ali’s arguments however failed to make a believer of Junior Finance Minister, Jaipaul Sharma. Sharma told the House that the Bill is not only comprehensive but rather “a best seller.” He stressed that there is no reason why the passage of the Bill should be delayed any further.
To strengthen his arguments, Sharma made reference to the CLICO saga which he said underscores the need for the Bill to be passed forthwith.
It was on January 2, 1994, that CLICO International Life Insurance Limited opened its doors taking over the life insurance operations in Barbados and the Eastern Caribbean of Colonial Life Insurance Company (Trinidad) Limited.
CLICO served the Caribbean for over 60 years. Its mission was to become the company of choice among life insurance buyers in Barbados and the Eastern Caribbean.
At the helm was Leroy Parris, former Chairman of CLICO Holdings Barbados Ltd., which included services such as CLICO International Life Insurance Ltd. With 60 years of service under its belt, the company became one of the largest local conglomerates in the region, encompassing over 65 companies in 32 countries worldwide, with total assets exceeding US$100 billion.
By the turn of the century, rumblings of fraud and money laundering at CLICO were felt.
In 2005, there was talk of naive and greedy managers. There was talk of failure of government, regulators and auditors; of incompetence and failures at every level and at the highest levels within the company; and finally, fear and talk of CLICO needing taxpayers’ bailout.
Understanding the situation from his bird’s-eye view within the company, the Chairman decided to protect his interest and before the mess hit the fan, CLICO was presumably being looted.
By 2007 to 2008, there was no hiding the fact that CLICO was limping financially as well as its branches in other Caribbean territories, including Guyana.
CLICO Guyana had approximately $6.9B invested in the Regional Insurance Company.
The Junior Finance Minister stressed that many who invested in CLICO are still to receive their monies. He noted that only a few were able to get compensation when the company flopped.
“Our biggest claim in this fiasco is that NIS is still owed $5.2B. So this is serious and people were asking what the then government did during this. Well I will tell you what they did. In 2009, they rushed through a piece of legislation called ‘The Insurance Supplementary provision 2009’ in Parliament and then passed a resolution to send the matter to the Economics Services Committee…,” The Minister explained.
He added, “Then, former Finance Minister, Dr. Ashni Singh, in his 2014 budget said that this legislation would have been passed before end of 2014. It was not…So yes, I guess according to them they did a lot…But this insurance giant (CLICO) represented a massive fraud against the people of this country.”
With this in mind, Sharma reiterated that the Bill must be passed to bring needed protection to the sector.
Jordan in providing closing statements thanked the various speakers for their contributions on the matter. The Finance Minister in support of Sharma’s position stressed the Bill is one which benefitted from four years of consultations and therefore believes that since it also enjoys the approval of several international consultants, it should be passed.
In spite of this, Opposition Chief Whip, Gail Teixeira held firm to her position. She insisted that the Bill should be sent to a Special Select Committee. She then placed a motion before the House to this effect.
Teixeira’s motion was however shot down by Government’s side of the House. Even her usual call for a division did not change the faith of her motion. The House then resolved itself into a Committee and considered the Bill clause by clause.
After it was passed, the House was adjourned to July 18 where other matters of national interest will be addressed.
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