“Country remains at risk as long as it is unable to verify the particulars of every placement, in particular the financial ratings of every insurer utilized, its relationship to the insured and the particulars of cover including relevant clauses in relation to Guyana’s exposure to liability.” – Insurance, Brokers Associations
Kaieteur News – The use of a UK broker by an ExxonMobil-led consortium to provide a US$600M per occurrence insurance policy for Guyana’s Stabroek Block appears to be in clear violation of the country’s Local Content Law. The landmark legislation which was passed in 2021 categorically states that 100 percent of the insurance business for the oil industry must go to Guyanese.
Bringing this matter into the spotlight for debate and due consideration by regulators were Melissa De Santos, President of the Insurance Association of Guyana and Peter Abdool, President of the Guyana Insurance Brokers Association.
According to recent court documents seen by this newspaper, ExxonMobil’s affiliate, Esso Exploration and Production Guyana Limited (EEPGL) utilized the services of a UK broker to prepare the US$600M policy. Kaieteur News understands that the policy is backed by three internationally recognized insurers, each of which subscribed to a proportion of the risk, based on their risk appetite. The names of the insurers are Ancon Insurance Company, Jamestown Insurance Company Limited, and ICM Assurance Limited.
In their missive to the press, De Santos and Abdol underscored that the 2016 Insurance Act strictly prohibiting the direct placement of insurances to foreign non-admitted carriers unless by engagement through a local ‘fronting’ insurer or through a local insurance broker in possession of a Special Brokers License. The industry leading stakeholders said therefore that the use of a UK. Broker that is “evidently unlicensed to operate in Guyana…brings sharply into focus, what appears to be a circumvention of our laws.”
They were also keen to note that the Local Content Law intended in its spirit to ensure Guyanese are able to benefit from oil and gas insurance premiums, reinsurance commissions and fees, and brokerage commissions.
In spite of the provisions of the law they said, “Unfortunately, the local insurance industry has, so far, mostly been bypassed in providing the services that it is fully capable and prepared to do… The local industry has much to bring to the table and is in fact an integral, underutilized part of the government’s natural mechanism in negotiation of coverage and management and oversight of oil and gas risk.”
They also hold the view that the “country remains at risk as long as it is unable to verify the particulars of every placement, in particular the financial ratings of every insurer utilized, its relationship to the insured and the particulars of cover including relevant clauses in relation to Guyana’s exposure to liability.”
Additionally, both stakeholders were also keen to note that the local industry is professional, capable and trained to meet the needs of the sector, adding that Guyanese insurers and brokers for the entirety of their history, always dealt extensively with the London Markets, Lloyds of London and international insurers and reinsurers worldwide. They noted too that the international oil and gas insurance market has already affirmed its readiness to do business with the local industry. In fact, they noted that the combined local industry has long furnished the regulator with a comprehensive consortium proposal in conformity with the publicly stated preferred approach of the highest levels of Government of Guyana. Kaieteur News understands that the industry, by an appointed committee, has, and continues to meet with and represent its position to every relevant level of regulatory body and government of which it is able.
While it is not unaware that legal recourse is available to rectify illegal breaches, both parties noted that they will instead exercise faith in the integrity of the Government of Guyana and the Central Bank, to enforce the Laws of Guyana as this is indeed within its mandate to cause the restoration of the considerable loss of revenue suffered by the industry as a result of the evident continued circumvention of the laws of Guyana.
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