Single Market for Insurance and Pensions (SIPMP)

FAQ

Frequently Asked Questions

SINGLE MARKET

What does a single market for insurance and pensions in the ECCU really mean?
What are the benefits of this single market and the new regulatory regime?
What are the disadvantages of this single market and the new regulatory regime?
Why is the single market restricted to only the insurance and pensions sectors?
How will this market be regulated?
How do you pass legislation in the ECCU that applies to several jurisdictions?
What happens if some ECCU territories don’t sign up to this new regime?
How will the current regulatory arrangements for insurance and pension funds in the ECCU be impacted by this single market and regulator?
What will be the impact on jobs of this single insurance and pension fund market?

REGULATORY ARCHITECTURE / COMMISSION

Why create another regional regulator; why not use the ECCB?
How will the Commission be funded?
How do you ensure the independence of the Commission?
The Commission is being given a lot of powers – to pass Rules, ban persons, and remove licensees.  What checks and balances will protect the industry from regulatory abuses?
How do you ensure that small jurisdictions and less developed insurance and pension markets get adequate attention from the Commission?
When are the single market and the Commission expected to come into effect?
Where will the Commission be located, and what reach will it have to the other ECCU jurisdictions?
What do you mean when you say “Participating States”?
Will the Commission have an office or branch in each jurisdiction?
What, if any, will be the relationship between the Commission and the ECCB?

FOREIGN / NON-ECCU INSURERS

Are there any restrictions on foreign insurance companies and intermediaries operating in the market?
How does a foreign insurance company obtain a licence to operate in the proposed single insurance and pension fund market in the ECCU?
If an insurer has a licence to do insurance business in a member state of the regional market does this mean it can operate in any or all of the participating territories?
Isn’t the requirement for an insurer to be registered in the ECCU in breach of the CARICOM requirements?

IMPACT OF NEW MARKET AND LAWS

Given the length of this Bill, will it increase the cost of compliance for insurers, which will in turn increase the cost of insurance?
What are the main changes required of the insurance and pensions sectors under the proposed uniform legislation? 
What is the capital requirement to obtain a licence as an insurer in the single insurance market?
Why can’t my company continue to operate under a Composite licence?
What protection will the uniform insurance and pension legislation provide to consumers?
If I have a problem with my insurance company what are the avenues for addressing my concern/complaint?
How stringent are the penalties under the uniform Insurance Bill and how will those penalties be enforced?
Does the law have restrictions on the business activities of insurance companies?
What types of intermediaries are eligible for a licence under the uniform Insurance Bill?

PURCHASING INSURANCE FROM FOREIGN (NON-AUTHORISED) INSURERS

If I live on one island can I have a policy with an insurance company on another island; if yes, how will my rights be monitored/protected?
Under the new law, will I be able to buy insurance from an ECCU insurer that is not licensed in my state?
Many of the consumer protection rules are simply unfair to insurers, and give a lot of power to the consumer.  How is this fair?

LLOYD'S

Why is Lloyd's being given special rules in the Bill?  Why can’t they just be subject to the same laws as everyone else?

INDUSTRY ENGAGEMENT

Why were the comments I submitted on the Bill ignored?
Why has the third version of the Bill taken so long to be issued?
Why hasn’t the Pension industry been engaged regarding the Bill?
When will we see the solvency rules?  Why haven’t these important requirements been released yet?
I have some comments on the Bill I want you to address now.  

TRANSITION

Will there be transitional arrangements for existing licensees in the insurance and pension sectors in the ECCU?
Many insurers will have to restructure their businesses to comply with the new laws.  What help will they get?  Will there be tax breaks for restructures/transfers of business?
We recently passed new laws for insurance, why do we need more laws so soon? 

PROJECT TIMING

Will Regulations be ready in time for the start of the Bill?  
It has been a long time, and there are still large holes in the Bill.  Why and when will these be resolved?

BAICO AND CLICO

Why haven’t I been paid on my BAICO policy?  I have been waiting for over a year, and you promised me $30,000.  Where is it?
Did ECCU policyholders lose so much with CLICO and BAICO because ECCU regulators were asleep on the job?
What is happening with CLICO?  Is the company going to be liquidated?  Will all our assets be given to Barbadian policyholders?
What is the BAICO judicial management costing us?  I hear KPMG has earned millions in fees, and what have we got from this?  When will we get some money?
Will this new market and regulator prevent another CLICO/BAICO type collapse?


SINGLE MARKET

What does a single market for insurance and pensions in the ECCU really mean?

A single market typically involves a mutual agreement among sovereign countries to provide for the free movement of capital, labour, goods and services. In this case the intention is for service providers to provide insurance and pension services within the ECCU, governed by a uniform law and regulated by a single regulator, the Eastern Caribbean Financial Services Regulatory Commission (the Commission).

By securing a licence to operate in one ECCU member territory, insurers will be eligible to operate in all participating member territories, subject to a right of objection by the Commission.  Insurers, insurance intermediaries, and pension funds will fall under the supervision of the Commission and uniform legislation, regulations and regulatory guidelines.

The requirements for pension funds regulation are being drafted for inclusion in the Bill.


What are the benefits of this single market and the new regulatory regime?

The single market should bring different benefits to different groups:

For consumers:

  • Higher levels of consumer protection
  • Increased competition and choice of insurers and products
  • Stronger prudential protection through enhanced regulation and increased capital and solvency requirements

For insurers:

  • Access to more markets/ a larger market
  • Greater geographic risk diversification
  • Lower barriers to entry into other ECCU markets
  • More efficient, consistent and cost-effective regulation
  • Lower regulatory burden by dealing with one insurance regulator 
  • Opportunities for consolidation and growth

For insurance intermediaries:

  • Increased professionalization of the industry, leading to high levels of trust and respect in the advice sector
  • Increased protection for clients, leading to higher levels of trust in the industry

The pension provisions are still under consideration, but benefits are expected to include a single regulatory regime, and increased protection for pension plan members. 


What are the disadvantages of this single market and the new regulatory regime?

There are no obvious disadvantages apart from the cost and effort in the initial implementation, as well as the fact that regulations may be less customised to local conditions, but any disadvantages are by far outweighed by the benefits to be derived. There may be some additional administrative burdens on the part of industry, but this really is the cost of doing business in a dynamic, environment that meets international standards and best practices.


Why is the single market restricted to only the insurance and pensions sectors?

The single market will begin with insurance and pensions but the idea is to leverage the success of the market to gradually expand it to include all other non-bank financial services, with the exception of international financial services (offshore).  Accordingly, the single market could over time include securities business, credit unions, friendly societies, lending institutions, money transfer business, etc.


How will this market be regulated?

The market will be regulated much like the banking sector in the ECCU, which is regulated by the ECCB.   There will be a single, regional regulator with a board of directors drawn from the participating member governments and stakeholder organisations, such as the insurance industry, the OECS Bar Association, and the regional accounting body.   The board of the Commission will report to the Monetary Council of the ECCB, which is a council of Ministers of Finance in the ECCU.

The Commission’s operations will be guided by the Commission Agreement, and the uniform Insurance Act.  The Commission will have significant independence and autonomy provided by the enabling legislation and its independent funding. 

The market will be regulated as a single market, meaning that the same legislation, regulation, regulatory guidelines/directives and regulatory approach will be applied to licensees in all participating territories. 


How do you pass legislation in the ECCU that applies to several jurisdictions?

This is achieved by:

  • passing a uniform Insurance Bill (the Bill is identical, with minor customisations) in each participating territory, and 
  • each participating territory entering into the Commission Agreement, which provides for the establishment of the Commission and the single insurance and pensions market.  After this, each participating territory enacts the Commission Agreement as law (the Commission Agreement Act).  

When the insurance law and the Commission Agreement Act are passed in each territory, this will empower the Commission as the insurance and pension regulator for that territory.   

This is similar to how the ECCB was established as the single regulator for commercial banking in the ECCU.


What happens if some ECCU territories don’t sign up to this new regime?

The Commission will be formed once five ECCU territories ratify the Commission Agreement.  Any remaining territories may join the arrangement after that time.  This is similar to what obtained with the ECCB, which did not immediately have all 8 territories signed up, as some joined over time.

Governments, industry and the general public are encouraged to ensure that their territory is part of the single market from inception to start enjoying the benefits of the market.


How will the current regulatory arrangements for insurance and pension funds in the ECCU be impacted by this single market and regulator?

The most significant change to consumers and insurers will be that the size of the insurance and pension markets will increase dramatically, as several small markets merge.  This is expected to result in increased competition and, thus, better service to consumers.   Industry participants, on the other hand, can expect to benefit from a larger pool of potential clients as well as greater regulatory consistency and certainty due to uniform legislation and a single regulator. 


What will be the impact on jobs of this single insurance and pension fund market?

The creation of the single market may lead to some rationalisation of jobs within the insurance and pension industries.  Market participants may take advantage of the single market to create service centres for the region, and there may be a rationalisation of the number of licensees in the industry through acquisitions or restructures, both of which might reduce the number of people employed.  

However, given that the new legislation will require companies to establish subsidiaries within the ECCU, a number of the services that are currently provided from outside the region may in the future be provided within the region, which can lead to more, and better paying, jobs.  

We expect that, over time, the market will be more efficient as a result of greater consistency and higher standards of operation.  However, it is difficult to speculate on the impact of jobs without an appreciation of the business model and strategy that firms may pursue in the new market. 


REGULATORY ARCHITECTURE / COMMISSION

Why create another regional regulator; why not use the ECCB?

There are numerous possible models for a regulatory framework.  Some countries have a single “super regulator”, which covers all financial services.  Others have regulators that are specialised, each of which covers one or two sectors.  Others divide regulation along prudential and market conduct lines.

For the ECCU, it was considered that establishing a regulator for non-bank financial services, which would cover insurance and pensions to begin with, and potentially expand to other non-bank financial services, was the most effective structure for this region.  This allowed for the necessary focus on insurance and pensions, which can often get less attention when covered by a banking supervisor.

While the ECCB is a prudential regulator, it is also responsible for monetary policy in the ECCU. The ECCB will continue to regulate commercial banks because monetary policy is often implemented through the banking industry. 

It is expected that the ECCB and the Commission will enjoy a close working relationship.  This is provided for in the structure of the Commission, as the board of directors will report to the Monetary Council, as does the board of the ECCB, and one director of the Commission will be appointed by the ECCB.


How will the Commission be funded?

The proposal is for the Commission to be funded from a levy paid by regulated entities, as well as from fees related to services such as licensing and lodgement.


How do you ensure the independence of the Commission?

The Commission will be governed by the Commission Act and Agreement and its independent Board of Directors.

As it relates to regulators, independence refers to operational independence or the ability of the regulator to carry out its day-to-day operations and decision-making responsibility without interference from the political process or supervised entities.  This ability is upheld in the provisions of the Insurance Bill, the draft Commission Agreement and the Commission Agreement Bill, which clearly sets out the responsibilities and authority of the Commission and does not recognise any other authority as sharing, or having oversight over those functions.

Importantly, the Commission is not subject to financial dependence on governments through territory budgets, but instead will be funded through levies on industry participants, and licensing and other fees.


The Commission is being given a lot of powers – to pass Rules, ban persons, and remove licensees.  What checks and balances will protect the industry from regulatory abuses?

The Commission is accountable to the Court and to the Monetary Council.  There is also an Appeals Board, which can hear appeals under the proposed Insurance Act.  In addition to this, there are specific processes that the Commission must follow before it takes the more extreme actions, such as imposing licence conditions, cancelling licences, and banning individuals.


How do you ensure that small jurisdictions and less developed insurance and pension markets get adequate attention from the Commission?

From a regulatory perspective, the responsibility of the Commission to each jurisdiction is enshrined in the common legislation.  This requires the same regulatory response regardless of size, although the Commission will employ risk-based supervision to ensure that higher risk or systemically important institutions receive additional focus.


When are the single market and the Commission expected to come into effect?

In order for the Commission to be formed, at least five member states of the ECCU must ratify the Commission Agreement.  In practise, they will also need to pass the Insurance Bill into law

We are currently working with an optimistic timeline of mid-2017, but there are many substantial steps that are required before then, so it is likely that a longer timeframe will be needed. 


Where will the Commission be located, and what reach will it have to the other ECCU jurisdictions?

The Commission will have its head office in one of the participating states; this decision will be made by the ECCB Monetary Council.  

A number of factors will be considered in deciding on a head office location for the Commission, including but not limited to, i) the financial and infrastructure support to be provided by the jurisdiction, ii) available concessions, iii) the size of the insurance market, iv) logistical factors, such as ease of access, and v) labour conditions. 


What do you mean when you say “Participating States”?

Participating States are those ECCU territories that have ratified the Commission Agreement, and so have agreed to be part of the new insurance and pension regime.


Will the Commission have an office or branch in each jurisdiction? 

The regulator will have structures in place to effectively service all of its supervised territories; this will include establishing physical offices in some or all territories.   The establishing laws are not expected to explicitly require the Commission to establish branches. 

However, it is still early days in establishing the detailed operating processes and structure of the Commission, so the Commission is yet to make an operational decision on how best to configure itself to effectively service all its territories.  


What, if any, will be the relationship between the Commission and the ECCB?

First, the Monetary Council of the ECCB will have an oversight role in respect of the Commission, and will appoint the Commission’s Board.

Both the ECCB and the Commission have prudential oversight responsibility, and have a mandate to promote financial sector stability in the region.  As such, the Commission and the ECCB are expected to have a close and strong working relationship, particularly in respect of financial conglomerates and systemically important institutions. 

In addition to the above, it is expected that there will be MOUs between these regulators for the sharing of information and expertise, and for collaboration on financial sector stability matters. 


FOREIGN / NON-ECCU INSURERS

Are there any restrictions on foreign insurance companies and intermediaries operating in the market?

The uniform Insurance Bill provides for a 3-year transitional period, after which there will be no non-ECCU insurers within the single market.  An insurer must be incorporated in one of the participating states in order to obtain a licence in any participating state.   

To obtain a new licence, non-ECCU insurers will need to move to or establish a local subsidiary in a participating state.   So, foreign insurers are welcome but they will need to establish a local subsidiary to operate in this market. 

There will be a three-year transition period for foreign insurers to prepare for the new requirements, and they may continue to operate in the ECCU during this time.


How does a foreign insurance company obtain a licence to operate in the proposed single insurance and pension fund market in the ECCU?

To obtain an insurance licence, an insurer that is not incorporated in a participating state must establish a company in a participating state.  That company may then apply to the Commission for a licence to operate in that state.  Once a licence is obtained, the company can exercise its ECCU passport right to operate in other participating states (subject to the Commission’s right of objection). 


If an insurer has a licence to do insurance business in a member state of the regional market does this mean it can operate in any or all of the participating territories?

No.  A licence issued in an insurer’s home State allows that insurer to operate in its home State.  An insurer licensed in its home State is eligible for a licence to operate in the other participating states by exercising its ECCU Passport Right.  However, the Commission has a right to object to any exercise of a Passport Right.   Any such objection will take into account a number of factors including an assessment of the insurer’s operating capacity to undertake the proposed expansion, and its compliance record. This is much like the current approval process for a new branch within a jurisdiction. 


Isn’t the requirement for an insurer to be registered in the ECCU in breach of the CARICOM requirements?

CLICO and BAICO taught us many important lessons.  One of those was that, in order to best protect policyholders in the ECCU, a company needs to be incorporated in the region, and needs to hold substantial assets in the region.  The new rules protect policyholders, and foreign insurers may – after the expiry of their transition period – still operate in the single market via an ECCU-incorporated subsidiary.


IMPACT OF NEW MARKET AND LAWS

Given the length of this Bill, will it increase the cost of compliance for insurers, which will in turn increase the cost of insurance?

It is a reality of modern regulation that increasing rules and supervision create an increase in compliance costs.  However, the benefit of a robust regulatory framework is an increase in consumer confidence and public trust; both of which redounds to the benefit of the industry.    

The Bill itself is a composite Bill, covering prudential regulation, consumer protection, contracts, as well as pension supervision.  Accordingly, it necessarily contains numerous provisions, which many countries split into 2-4 separate pieces of legislation.


What are the main changes required of the insurance and pensions sectors under the proposed uniform legislation?  

Foreign insurers will be required to move to, or establish a subsidiary in, a participating state; insurers will be subject to increased capital and solvency requirements; all licensees will be required to comply with new and enhanced consumer protection requirements. 


What is the capital requirement to obtain a licence as an insurer in the single insurance market?

The capital requirement is still being calibrated as part of the consultation process.  However, the last proposal was EC$3.0M for general insurers and EC$7.0M for long-term insurers.  A 3 year transition period is available for insurers to prepare for this new requirement. 


Why can’t my company continue to operate under a Composite licence?

International best practice is that long-term insurance and general insurance are separated to avoid the risks of one type of insurance business spilling into the other.  Composite insurers will have 3 years after the start of the new law to consider and restructure their arrangements, in addition to this lead-time before the Bill is passed into law.


What protection will the uniform insurance and pension legislation provide to consumers?

There is a substantial degree of focus from international organisations such as the World Bank and the OECD on financial consumer protection.  Until now, ECCU consumers have not enjoyed many of the financial consumer protection provisions that are evident in the laws of other countries, particularly elsewhere in the common law world.

For this reason, the Bill proposes numerous consumer protection advances for the ECCU, including a focus on the fair treatment of consumers, improved disclosure, rules on the handling of client money, and a framework for internal and external complaints resolution.  

In addition to the above, all licensees will be subject to a set of principles-based obligations that are intended to improve customer protection, and there are a number of insurance-specific rules requiring higher levels of transparency in relation to insurer decisions such as the denial of claims.


If I have a problem with my insurance company what are the avenues for addressing my concern/complaint?

The current law provides for insurance companies to have mechanisms for receiving and resolving complaints. However, a more robust set of dispute resolution measures will apply under the new law to require licensees (including insurers, certain insurance intermediaries, and pension providers) to have consumer-friendly internal and external complaints processes in place.  The most appropriate mechanism for external dispute resolution is still under consideration.


How stringent are the penalties under the uniform Insurance Bill and how will those penalties be enforced?

While still being calibrated, the intention is for the penalties in the Act to be quite stringent.  The purpose of the penalties is to discourage non-compliant behaviour, and to ensure that there are appropriate consequences for breaches of the requirements of the Act. Accordingly, penalties need to be stringent and proportional to act as a deterrent. 


Does the law have restrictions on the business activities of insurance companies?

Yes, the law restricts insurance companies to the conduct of insurance business and business incidental to insurance business. 


What types of intermediaries are eligible for a licence under the uniform Insurance Bill?

All of the intermediaries that currently operate in the ECCU will be eligible for a licence under the Insurance Bill.  That is, insurance brokers, insurance agents, sales representatives, and insurance adjusters. 

However, all insurers and insurance intermediaries will need to meet the new requirements for licensing that are outlined in the Bill.  For an interim period, persons registered under the existing laws will be deemed to have a licence for up to two years from when the new law commences.


PURCHASING INSURANCE FROM FOREIGN (NON-AUTHORISED) INSURERS

If I live on one island can I have a policy with an insurance company on another island; if yes, how will my rights be monitored/protected?

Under the current law, a person can buy insurance from any insurer registered to carry on insurance business in their state.  If an insurer is not registered in your state, then certain rules apply, both now, and under the proposed law.

If a person wants to purchase insurance from an overseas insurer, the current law requires that they obtain permission from the local insurance supervisor to do so.  There is a similar process proposed under the new Bill.  

Any person purchasing insurance from an overseas insurer should be mindful that they may not have the same legal protections or rights as they do when buying insurance locally and that the local regulator has no authority over that insurer.

The single market should reduce the need for consumers to purchase insurance overseas as there will be more competition and greater options from ECCU insurers that are required to meet tougher financial and conduct requirements.


Under the new law, will I be able to buy insurance from an ECCU insurer that is not licensed in my state?

Once the new insurance law commences, if an insurer based in the ECCU is not licensed to carry on insurance business in your state, it is for one of three reasons: 

  1. the insurer has not exercised its passport right to carry on business in your state.  They could even be in their transition period before they get their new licence in their home State, which is a prerequisite to exercising that passport right;
  2. the insurer may have exercised its passport right to operate in your state, but that process is not yet complete, and they aren’t yet licensed;
  3. the insurer may have exercised its passport right to operate in your state, but the Commission objected and the licence was not issued. 

All those scenarios will mean that the company does not have the legal right to offer insurance in your state.  

It will be possible to purchase insurance from overseas insurers, but the Commission will need to give its consent. 


Many of the consumer protection rules are simply unfair to insurers, and give a lot of power to the consumer.  How is this fair?

The purpose of consumer protection laws is to redress the imbalance, or asymmetry, between consumers and service or product providers such as insurance companies.  Such asymmetries include vast differences in information, financial resources, and power.  So, consumer protection laws by necessity impose requirements on insurers in order to create a more level playing field. 


LLOYD'S

Why is Lloyd's being given special rules in the Bill?  Why can’t they just be subject to the same laws as everyone else?

Lloyd’s has a unique structure that means Lloyd’s underwriters cannot in practise comply with identical provisions to other types of insurers.  For this reason, every country where Lloyd’s operates has dedicated provisions for Lloyd’s.  The intention in this Bill is to create as level a playing field as possible to ensure that Lloyd’s must meet equivalent requirements to other insurers.  

The Part on Lloyd’s will be released for public comment shortly.


INDUSTRY ENGAGEMENT

Why were the comments I submitted on the Bill ignored?

Every comment submitted to date on the draft Bills has been considered.  A table of feedback will shortly be released showing all of the 385 individual comments made on the second draft of the Bill, and the response to each one.  Some are under continued consideration, and may be addressed in the next draft of the Bill.


Why hasn’t the Pension industry been engaged regarding the Bill?

The pension provisions of the Bill have not yet been reviewed for the purpose of making necessary amendments.  The Pension industry has been invited to these consultations, and is further invited to make submissions on changes that should be made to modernise and enhance regulation of the sector, and also to protect pension members.
 


Why has the third version of the Bill taken so long to be issued?

We have had some resource challenges, as insurance and drafting skills are in heavy demand.  However, our goal is to continue to move forward, and we have an indicative timetable for the next draft and finalisation of the Bill.  


When will we see the solvency rules?  Why haven’t these important requirements been released yet?

The solvency rules will be released for a separate consultation period when they are ready; this is expected to be in 2016.  These rules will not apply from inception of the market, but will apply to insurers once they obtain a new licence under the new Insurance Act.
 


I have some comments on the Bill I want you to address now.  

We really appreciate the time all industry participants have taken to comment on the Bill and we are considering every comment in detail.  While we are happy to note comments down today and pass these to the drafters, we can’t debate individual provisions here.  We strongly recommend that you make your submission in writing, on the template provided, by 31 January 2016.  Please give us as much information as you can about any concerns, so we are better able to reach the right result.


TRANSITION

Will there be transitional arrangements for existing licensees in the insurance and pension sectors in the ECCU?

There will be a 3-year transition period for insurers and a 2-year transition period for insurance intermediaries.  Pension plans have a 1-year transition period.  During this time, they may continue to conduct the business they were authorised for immediately prior to the start of the new Act.

Whilst many provisions of the Bill are expected to apply from inception, many provisions will not commence until some time after the Bill is in force.  For example, it is expected that there will be a transition period to comply with statutory fund requirements.

Stakeholders are invited to comment on the transition periods proposed, noting that the insurer transition period was extended by 1 year to 3 years due to feedback from the industry.


Many insurers will have to restructure their businesses to comply with the new laws.  What help will they get?  Will there be tax breaks for restructures/transfers of business

We recognise that many insurers will have to reconsider their business model before they will be able to comply with the new laws and obtain their new licence.  According, the industry is invited to petition regional policymakers directly for relief related to the restructuring of their business to align to the new requirements (i.e. tax relief on asset transfers)


We recently passed new laws for insurance, why do we need more laws so soon? 

Laws are expected to evolve to adequately respond to changes in the environment.  The period 2009 to 2012 saw significant upheaval in the insurance markets in the ECCU, some of which could not be adequately addressed because of weak legislation; accordingly, Governments saw the need to update the relevant legislation.

The recently passed legislation is also base on a single territory model, while the draft Insurance Bill is based on a single insurance market for a number of territories.


PROJECT TIMING

Will Regulations be ready in time for the start of the Bill?  

It is expected that the regulations necessary to meet Day 1 requirements of the Bill will be available when the law commences.  Other regulations or rules to be issued by the Commission may be released at a later date, following any necessary consultations.
 


It has been a long time, and there are still large holes in the Bill.  Why and when will these be resolved?

We expect that the matters currently outstanding will be resolved in the first quarter of 2016.


BAICO AND CLICO

Why haven’t I been paid on my BAICO policy?  I have been waiting for over a year, and you promised me $30,000.  Where is it?

The Steering Committee is not involved in the Policyholder program for BAICO.  However, we understand that funds due to be received from the Government of Trinidad and Tobago have not yet been received, due to budget issues arising from the drop in the international oil price.  The ECCU Governments continue to follow up on the receipt of these funds and will finalise outstanding payments as soon as possible.


Did ECCU policyholders lose so much with CLICO and BAICO because ECCU regulators were asleep on the job?

There are a number of factors which contributed to the losses to policyholders in the failure of BAICO and CLICO, including weak legislation and regulation in the ECCU.  This draft Insurance Bill and single market structure seeks to directly address the deficiencies which gave rise to the CLICO and BAICO failure and its attendant impact on consumers. 


What is happening with CLICO?  Is the company going to be liquidated?  Will all our assets be given to Barbadian policyholders?

Issues concerning the future of CLICO have been in Court in Barbados, with the court considering either a restructuring of Barbados liabilities or the liquidation of the company.  The ECCU Governments have been represented in this matter; the ECCU Governments are seeking a fair outcome for ECCU policyholders and appropriate scrutiny of any restructuring of the entity.

[To date, the Court has not issued its ruling].


What is the BAICO judicial management costing us?  I hear KPMG has earned millions in fees, and what have we got from this?  When will we get some money?

The Judicial Managers and the ECCU Governments have been working together to maximise the returns to BAICO policyholders.  The Judicial Managers want to distribute proceeds of assets realised by the company and funds received from a settlement of litigation.  The ECCU Governments are in the process of passing Plan of Arrangement laws to enable a compromise with creditors and the swift payment of these funds to policyholders.


Will this new market and regulator prevent another CLICO/BAICO type collapse?

The single insurance market and the insurance Bill have a number of features that directly respond to some of the deficiencies that contributed to the failure of CLICO and BAICO in the ECCU.  These features include, but are not limited to, the following:

  1. Insurers will need to be incorporated in the ECCU, which gives the Commission and the Courts greater control over the entity and, should insolvency occur, its resolution.  
  2. The solvency rules will be more robust, reflecting modern standards, and are expected to limit the use of receivables and intercompany balances for balance sheet support.
  3. Insurers will be required to maintain prescribed assets as part of their insurance fund within the ECCU.  
  4. The regulator will have stronger and more comprehensive enforcement powers, will be better resourced, and be able to take action on a whole-of-ECCU level.

These measures should lead to a stronger, better regulated insurance market in the ECCU. 

However, it should also be remembered that, even with the best regulation, there will be failures. The Regulator’s role is to minimise the risk of failure, and in the event of a failure, to move swiftly to minimise the impact on consumers and the market.