– finance minister tells Parliament
…functions transferred from insurance commissioner to BoG
Government sees the need for a single financial sector regulator, Finance Minister Dr Ashni Singh told Parliament during Thursday’s debate on the bill that will now see the Bank of Guyana (BoG) taking over the functions of the Commissioner of Insurance (CoI).
The bill received the support of the government and the PNCR-1G. The Alliance for Change did not support the bill and members of the party walked out of the National Assembly, as the piece of legislation was being debated.
According to the explanatory memorandum of The Insurance (Supplementary Provisions) Bill of 2009, the legislation “seeks to pave the way for the BoG to administer the Insurance Act and for a person nominated by the bank to be appointed by the court as judicial manager”. It added that “accordingly, the Financial Institutions Act, the Bank of Guyana Act, the Insurance Act and any other law shall be read and construed with such modifications as to facilitate the functions of the bank under this Act.”
An amendment was made to the bill, which allows the Finance Minister to determine a date for the bill to come into operation.
Singh said the bill was a simple one that came at a time when the issues of financial sector strength and regulation were the subjects of many debates. He explained that the move was to ensure that adequate regulatory resources are available to aid in supervising the insurance sector. He added that in the light of recent occurrences, all available resources would be used to bolster the regulatory body of the sector.
He said the BoG was selected since this was a well-established body with a proven track record. He said it would be augmented by resources currently available in the Office of the Commissioner of Insurance (OCI).
Singh pointed out that the issue of having a Single Financial Sector Regulator has become a matter of much debate. He admitted that this had several pros and cons but said that the government felt that taking this step would help make financial regulation more robust.
PNCR-1G MP Winston Murray indicated his party’s support of the bill on the grounds that the party was in support of improved oversight for the financial bodies in the country. He, however, expressed some concerns about the bill.
He said the very nature of the bill with its emphasis on greater regulation suggested that the OCI was not doing an adequate job. He also questioned why the bill was not brought before the House much earlier, if a unified regulatory body was such a good thing.
Murray also made reference to reports that the current Commissioner of Insurance Maria van Beek had resigned and asked whether this bill was an attempt to address this situation in an undercover manner. The Kaieteur News had recently reported that following the attempt on her life van Beek had decided to resign from her post. This report was, however, subsequently refuted in a press release issued by the OCI.
Murray enquired about the future of the employees currently attached to the OCI and queried whether they would now be attached to the BoG.
Singh at this point indicated that this was indeed the plan.
Alliance For Change MP Khemraj Ramjattan in a passionate presentation called the bill “a most clever ploy” brought before the National Assembly to achieve sinister objectives. He argued that when the Insurance Act of 1998 was introduced back in the National Assembly some years ago, the then finance minister Bharrat Jagdeo in presenting the bill, had argued that there should be no single financial regulator within the country. Back then Ramjattan was a member of the PPP/C.
He questioned why there was a sudden change in policy. He argued that the attempt to transfer the regulatory powers of the OCI to the central bank was simply an act to transfer powers into the hands of persons more malleable to the government. He also argued that it was removing transparency. Ramjattan further emphasised that it was better to have several bodies to regulate thus ensuring transparency.
Ramjattan said van Beek was doing a good job at regulating the insurance bodies in the country. He explained that his party had called for her resignation because she failed to prosecute CLICO, even though the company was breaking the Insurance Act by investing such a substantial part of its assets overseas. The Commissioner is authorised to pursue legal action against such defaulters under the Insurance Act.
The AFC MP also questioned the pace at which this particular piece of legislation had been “steamrolled” into the National Assembly. He pointed out that in about a week the bill had been tabled and speedily brought before the House ahead of other matters. He opined that the bill had “serious implications for the country’s financial sector.”
He also raised concerns about the ability of the BoG to carry out the necessary functions as it related to regulating insurance companies.
After his presentation, Ramjattan left the National Assembly. Shortly after, the other two AFC MPs present, Sheila Holder and Latchmin
Punalall followed. Holder told this newspaper that the walkout was “spontaneous”, since the members did not want “to be part of the deception.”
Irfaan Alli, the Housing and Water Minister, slammed the AFC for the “doubled-edged sword” politics that they practice. He said the same party that had a few months ago called for the resignation of van Beek was now objecting to the powers of the OCI being transferred to the central bank. He said that there were several countries that had successfully adopted similar measures.
Meanwhile, Trade and Commerce Minister Manniram Prashad welcomed the main opposition’s support for the bill. He said that the bill was timely and added that it had the support of members of the private sector.
He said that the BoG was a fine institution that was well run and was perfectly equipped to carry out this additional regulatory function. Prashad said this has worked several times before in other countries, including in Trinidad and Tobago.
