Only a resolution of the CLICO fiasco in Barbados can restore Barbadians’ confidence in the insurance industry.
That is the view of financial management consultant Osborne Nurse who helped the Trinidad and Tobago Government sort out the CLICO mess in that country and steered Barbados to designing a deposit insurance scheme.
He suggested the Financial Services Commission (FSC) should be the leader in bringing resolution to the issues surrounding the insurance company, but that did not appear to be happening.
“In the current circumstances, the FSC appears not to be the most central of the parties with the most direct role in achieving such a resolution. Those key parties appear to be the judicial manager, the Government and the courts,” Nurse said as he delivered the FSC’s anniversary lecture in the Grand Salle of the Central Bank last night.
Nurse, who served as advisor to the Trinidad Central Bank, observed that the Barbados financial sector accounts for 20 per cent of GDP but, “as indicated in several other sources including the . . . FSC’s annual report for 2014, the sector still has not recovered from the impact of the 2009 crisis, and has in the most recent report showed a decline in profitability”.
He said that a final resolution of the CLICO matter was a major factor in the restoration of confidence in the insurance industry.
“The uncertainty that currently surrounds this issue does not contribute to improving public confidence in the industry,” he told an audience that included FSC chairman Sir Frank Alleyne and Parliamentary Secretary in the Ministry of Finance Senator Jepter Ince.
Nurse pointed out, however, that the CLICO fiasco was not to blame totally, as the inability of the local economy to recover quickly from the world recession had also shattered Barbadians’ faith in financial instruments.
“It is clear that confidence in the insurance sector will not likely reach pre-2009 levels in the context of the still sluggish growth of the economy, and the as yet unresolved matters relating to the insurance portfolios of CIL,” he said.
“I would imagine, therefore, that in order for the required level of confidence to be restored, the first requirement would be for the overall economic outlook for Barbados to reflect sustained and sustainable growth in the near future.”
Nurse observed that with total assets of just under $3 billion in 2013, the Barbados insurance sector represents approximately 37 per cent of total financial sector assets, which he said is about seven per cent of GDP.