A local financial advisor says Government’s decision to close Resolution Life Insurance Company (ResLife), the court-sanctioned successor of CLICO, will only place policy holders in a deeper bind in the long run.
According to the advisor who is close to the developments but who did not want to be named, even though Government will offer the liquidator (Financial Services Commission) enough cash to facilitate the payment of a maximum of $20,000 to life insurance policyholders of ResLife, persons holding policies will be short-changed.
“This will pull the rug from under the feet of policyholders with traditional medical insurance, life insurance and retirement insurance plans and coverage. This will expose them and put them at risk. What if, sadly, policyholders die after losing the life insurance coverage that protected their loved ones in the event of their death, thereby leaving these beneficiaries financially vulnerable and exposed to a deterioration in their standard of living?” he asked.
Prime Minister Mia Mottley announced two months ago that policyholders and claimants are to benefit from a settlement package of $103 million in cash payout and $300 million in bonds. This will see eligible policyholders or claimants due less than $20,000, receiving cash, and the balance in 15-year bonds.
However, the advisor is also concerned that given the age of persons with retirement and medical policies, getting an equivalent policy would be almost impossible. He therefore argued that before announcing the closure of ResLife, Government should have already signed off on a deal to sell all of the portfolios.
“Retirement plans that have not matured will now stand to never receive any funds from annuity payments that would usually accrue at maturity. The loss in this regard will be significant especially given that the elapsed years when the accumulation phase usually occurs cannot be regained. Therefore, the purchase of any new retirement plan will be impacted by the shorter time span from which to generate an impactful retirement fund that provides meaningful annuity payments on which to survive at retirement age, “he contended.
Last month, Chief Executive Officer Cheryl Senhouse revealed that five firms are vying for ResLife’s medical insurance portfolio of Resolution Life Insurance Company Limited (ResLife), and by June one of them is to be chosen. She explained that with the impending closure of the ResLife, the company recently advertised for expressions of interest in its medical portfolio. ResLife’s chairman Tony Hoyos also told that before management could put forward a recommendation to the board, due diligence had to be conducted.
“However, that transfer of the medical portfolio is something that we want to conclude as quickly as we can so that people’s medical insurance doesn’t lapse,” he said.
Companies were given until April 24, 2019 to indicate an interest and ResLife is expected to complete the selection process in this month.
However, the source questioned why Government needed to close the entity in the first place.
“ResLife took over a sanitised portfolio of traditional policies which were still in force (active) some of which were still receiving premiums from the policyholders even by way of salary deductions.” Additionally, he pointed out that ResLife was licensed to sell and generate additional cash flow via the sale of insurance policies and taking in renewal premiums.