History of Project
In July 2015, the participating governments of the Eastern Caribbean Currency Union (ECCU) launched a project whose primary objective was the establishment of a single insurance and pension market (SIPMP). Consultation with the industry and regulators began in 2011, and has been overseen by the governments working through the Monetary Council of the Eastern Caribbean Central Bank. In essence, the single market provides for free movement of capital, goods and services through mutual agreement among ECCU countries. This initiative, which was undertaken in accordance with the commitment made under the 2009 Revised Treaty of Basseterre Establishing the Organisation of Eastern Caribbean States and Economic Union, was a result of recommendations made from a World Bank study commissioned by the regional governments, of the most appropriate regulatory and market structure for the ECCU, following the collapse in 2009 of the CIL Financial insurance subsidiaries, British American Insurance (BAICO) and Colonial Life Insurance (CLICO).
The immediate response of the Governments of the ECCU to the crisis in 2009, included the establishment of a Ministerial Sub-Committee on Insurance, and a supporting Technical Core Committee, to provide strategic and technical advice to the Governments. The Governments not only implemented responses that began to address the impact on policyholders, and the financial system, but also turned their minds to creating a stronger framework for insurance and pensions regulation in the sub-region through the SIPMP, which comprises a uniform insurance and pensions law, and a single regulator, the Eastern Caribbean Financial Services Regulatory Authority. (ECFSC).
The new uniform insurance legislation addresses important gaps which currently exist, for example, few protections for consumers, and a less than modern capital management regime. Also in issue is the need to ensure the agility and proper resourcing of regulators to effectively supervise both domestic and cross-border businesses, and to address urgent and complex issues as they arise.
The SIPMP promotes better consistency, certainty and lower cost of business and compliance burden for the insurance industry. Consumers will also be impacted through increased stability in the financial sector, and more favourable protection for customers of insurance and pension providers. Over time consumers should also see benefits including more choice of insurers and insurance and pension products.
The broad objectives of the ECFSC will be to:
- Promote institution, industry and sector stability;
- Monitor, measure, manage and mitigate risk in the regulated sectors;
- Promote and monitor fairness, transparency, customer protection and public confidence; and
- Promote and support financial literacy and public education.