About ten years ago, CLICO was unable to meet its obligations to its over 20,000 policy-holders. Fortunately, CLICO had assets which could be sold and equitably distributed to policyholders. They could then sue the government for any shortfall for its failure to properly regulate the company. That was the advice given to policyholders, but they rejected it and chose to trust a Government-managed process that tied up the CLICO assets in court.
Since the government apparently failed to properly regulate CLICO, it seems reasonable that they should bear some liability for any policyholder losses. However, it was clearly foreseen that the Government would never magically obtain the managerial competence to equitably fix the CLICO mess. But the policyholders believed otherwise.
A decade ago, all policyholders should have been instructed to stop making any further payments to the failed company, and a liquidator should have been appointed to identify, sell, and equitably distribute CLICO’s assets in Barbados. Instead, they trusted the Government to represent their interests and were directed to do something that should have alerted them that something was clearly not in their best interests – keep making payments to a failed company.
The policyholders should have known that any Government managed process could be extremely inefficient, costly and badly managed. It was foreseen that most policyholders would be given an unfavourable like-it-or-lump-it solution. They were warned that they would be bled dry by the process that they were asked to trust. But they could not be dissuaded.
After an unnecessarily inefficient ten-year delay, the policyholders finally regained control of the CLICO assets. However, rather than seize the opportunity to sell the assets and equitably share the revenues, the policyholders once again inexplicably trusted the Government to represent their interests.
In exchange for the policyholders’ child-like misplaced trust in them, the Government has decided to take away all rights that policyholders have to the valuable CLICO assets, and give many of them nothing in return. Policyholders are once again allowing themselves to be tricked.
The Government is cleverly reducing the amount that it will pay for the CLICO assets, by forcing policyholders to pay the Government for taking away their rights to them. The Government did this by dictating that any policyholder who did not pay their premiums after the company failed, would have those unpaid premiums deducted from what was owed.
To put this in perspective, if a person’s monthly premium was $200, and they had not paid their premiums to the failed company for the past 10 years, then the Government will force that person to pay a penalty of $24,000. If the policyholders’ investment in the CLICO assets is less than $24,000, then the policyholder gives up their right to their stake of the CLICO assets in exchange for nothing – they are effectively disqualified.
The policyholders have clearly been frustrated. They should have the same right to the CLICO assets today that they had ten years ago. The assets were protected by the courts and have not gone anywhere. They are finally available to policyholders. To disqualify policyholders from their stake in the CLICO assets, on the basis of not continuing to pay premiums to a failed company for the past decade, is unconscionable.
The policy owners are once again advised to maintain control of their right to CLICO’s assets, and to have them sold and equitably distributed. They can then decide whether they wish to pursue the Government in the courts for any shortfall due to Government’s failure to properly regulate the company.
Regrettably, their reaction to this advice is foreseen. We have all watched in dismay as over 20,000 CLICO policyholders allowed the Government to parade them around with derision for the past decade. They are showing no signs that they have finally had enough. CLICO policyholders, it seems, are, more than the rest of us, gluttons for punishment.
Grenville Phillips II is a Chartered Structural Engineer and President of Solutions Barbados. He can be reached at [email protected]