– in functioning as insurance commissioner
Six months after taking over the functions of the Office of the Commissioner of Insurance, the Bank of Guyana (BoG) is finding the dearth of expertise in the insurance field a challenge to its operations, its Governor Lawrence Williams says.
Williams told this newspaper recently that since assuming the functions of this office in July, the bank has found it challenging especially because of the shortage of persons with the requisite skills and training. Currently the department has a small staff–of approximately seven persons, including clerical staff, the governor explained. Of those, about four persons are tasked with doing the technical work. Former deputy commissioner of insurance Tracy Gibson is currently in charge of this department. Gibson is a lawyer by profession but has had years of experience in the insurance sector, Williams said.
The governor, however, stressed that the bank was doing its best with the resources and stated that deliberate efforts were being made to improve its functioning by having specialized training. Williams pointed out that monitoring the insurance sector was completely different from other aspects of the financial sector and as such specialized training is necessary.
Last May, the National Assembly passed a bill to transfer the role of the Commissioner of Insurance to the Bank of Guyana. During the heated debate on the bill, Finance Minister Dr Ashni Singh articulated that the government saw the need for a single financial regulator and that the move was being done to facilitate this. The bill was passed with the support of the main parliamentary opposition the PNCR-1G but the Alliance for Change strongly objected to it on the grounds that its motives were suspicious. The AFC, through its Chairman Khemraj Ramjattan, argued that it was better to have several agencies monitor finance agencies than just one since it ensured greater transparency. He also raised concerns about the ability of the BoG to carry out the necessary functions related to regulating insurance companies.
The bill was later enacted after it was assented to by President Bharrat Jagdeo. The tabling, passing and enacting of this piece of legislation came after the debacle with the CLICO (Guyana) insurance company. CLICO Guyana was placed under judicial management after over 50% of its assets became impaired when its sister company in the Bahamas collapsed. The emergence of this piece of legislation also came after then commissioner of insurance Maria van Beek, who was also appointed judicial manager of CLICO (Guyana), survived an execution attempt. This attempt on her life caused much speculation about whether she would continue in the position and she did eventually migrate after recuperating from her injuries.
Williams admitted that the CLICO debacle had negatively affected the insurance industry. He was, however, optimistic that the CLICO issue, was a one-off experience and he pointed out that the BoG was putting measures in place to prevent such a reccurrence.
After the emergence of the CLICO fiasco, van Beek was criticized for not taking stronger action to ensure that CLICO (Guyana) re-duced its overseas investments as required by the law. The $6.9 billion invested in CLICO Bahamas (which represented 53 % of the company’s total assets) is an infringement of Section 55 of the Insurance Act, Chapter 91:02 which states that insurance companies must invest at least 85 per cent of their statutory funds locally. This excessive investment had been noted by van Beek and she had written to CLICO instructing them to reduce this exposure but this was never adhered to and the insurance company was never sanctioned.
The financial woes of CLICO have affected the holders of some 14,900 insurance policies, 65 agents and a substantial portion of the 90 staff members who have lost their jobs. The government has moved to liquidate the company but ongoing legal wrangling has held up this process.
