(Trinidad Express) Insurance companies will soon need to hold hundreds of millions of dollars or, in some cases, in excess of $ 1 billion, in additional regulatory capital under new legislation which was tabled in the House of Representatives yesterday.
In a statement to Parliament, Finance Minister Winston Dookeran said the Insurance Bill represents a “significant departure from the past and would help companies mitigate their risk exposures”.
Dookeran said the most important reason for upgrading the insurance legislation was to protect the policyholder. “This is why, for example, this bill requires an increase in capital for insurance companies. In today’s climate, it is unacceptable that companies are only required to hold $1 (million) to $3 million in capital, while mobilising policyholders’ funds amounting to hundreds of millions or billion of dollars.”
The bill also gives authority to the Central Bank to employ enforcement tools such as stiffer penalties for breaches of certain provisions of the legislation and the ability to remove directors, auditors and actuaries.
Dookeran said the bill also contains a range of proposals to strengthen corporate goverance in insurance companies. These include additional requirements for the composition of audit committees including the need for independent directors; whistleblowing roles for directors, auditors and actuaries; access to auditors working papers by the regulator; and more effective measures for assessing fit and proper requirements for directors and officers.
Dookeran said the bill seeks to significantly improve the oversight of insurance companies and the financial system by: a) strengthening prudential requirements including the introduction of risk-based capital and actuarial standards; b) introducing more stringent corporate goverance requirements for insurance companies; c) providing the Central Bank with effective regulatory authority over financial groups; d) improving public disclosure with a view to promoting market discipline; and e) providing the Central Bank with a wider range of preventative and corrective measures.
The minister said there were currently no prescribed actuarial standards for life insurance companies in Trinidad and Tobago.
