Opposition Leader Mia Mottley has called for strengthening of the regulations that govern the insurance sector here.
Addressing the House of Assembly this morning during debate on the British American Insurance Company Limited Preservation Act, Mottley said while she supported Government’s intervention, she believed the administration had not gone far enough “to seek to trace and recover assets so as to minimize the liability and exposure of the taxpayers of Barbados”.
She charged that it could cost $400 million “to stabilize” the over 15, 000 British American Insurance Company Limited (BAICO) policyholders and over 30,000 policyholders of CLICO International Life (CIL) who have been affected by the collapse of the insurance companies.
Minister of Finance Chris Sinckler, who piloted the measure, said Government had contemplated a gap of $58 million for the BIACO plan. However, that ended up now being $84.6 million because of the inclusion of the $26.6 million property assets contained in BAICO’s statutory fund.
Government will also be expected to fill a shortfall of about $8 million in the BAICO employee pension plan for 72 former staff members.
Under the CIL plan, $52 million will go towards the immediate overhaul of the company over the next year-and-a-half and $5 million to the Judicial Manager in fulfillment of CLICO’s immediate obligations.
But Mottley said she was not convinced that there was appropriate revision of the regulations and that a fresh look at the domestic insurance regulation and the regulator of insurance was needed.
“What we don’t want again is persons using people’s money as an automatic teller machine, because insurance premiums are not an automatic teller machine to finance the ambitions of management or ownership of any insurance company,” Mottley said.
“I therefore ask the Government to update us or to indicate to us . . . what will be done to alert the public as to what are the enhancements and the improvements coming to our regulatory climate in relation to insurance companies and in relation to those other deposit-taking institutions in this country.”
She also called for a debate on the banking sector in the region, the difficulties it is experiencing and the protection of consumers as it related to insurance companies.
Mottley recommended that Government takes note of some countries’ decision to put a cap on the amount of money some insurance companies are allowed to spend in some areas, using marketing of health insurance as an example.
“If you don’t do that the insurance company seeks to get its return on all of its expenditure and all its expenditure can include things that are really not related to the fundamental business that it is carrying out, in this case health insurance. It may be sponsoring shows, it may be sponsoring all kinds of festivals that has nothing at all to do with the underlining issue of the provision of health insurance.
“So I do believe that our legislative and regulatory environment needs further strengthening given the experiences of CLICO and BAICO, and given the extraordinary cost that the Government of Barbados has had to assume now in order to make householders whole in relation to principal as a result of the experience of these entities,” the Opposition Leader said.