Transfer of COI functions greeted with skepticism

May 06, 2009 News

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Given the track record of Government Bills, the National Assembly will approve the Insurance (Supplementary Provisions) Bill 2009, tomorrow. The Bill will seek to transfer the functions of the Commissioner of Insurance to the Bank of Guyana (BOG).  According to the legislation tabled, notwithstanding anything in the Insurance Act 1998 or in any other law, the Bank of Guyana shall, when the Bill is enacted, be charged with the general administration of the Insurance Act 1998.
Under the proposed legislation, the Bank in the exercise of its functions shall conform to any general or special directions given to the Bank by the Finance Minister.
Should the Bill be passed and enacted, all functions of the Commissioner of Insurance (COI) under the Insurance Act, and the functions assigned to the Commissioner by any other law and any Order of Court, shall stand transferred to the Bank of Guyana.  Thereafter, the Bank will discharge the functions through any person, including any officer of the Bank, or through another person duly authorised by the Bank on that behalf.
The new law will also empower the Bank to take any legal proceedings or continue any pending legal proceedings, including making an application to the Court for the appointment of any person nominated by the Bank as Judicial Manager.
The move, however, has been greeted with skepticism by the Alliance For Change.
In an invited comment, Chairman Khemraj Ramjattan, who is spokesman on financial matters for the party in Parliament, said that it was a suspicious move with an obviously sinister motive to transfer the functions of COI to the Bank of Guyana given that the COI was statutorily created to be a check and balance with other institutions in our financial architecture.
The Commissioner of Insurance, according to Ramjattan, was intended and so designed to be a ‘ferocious watchdog’ over the insurance sector. To now delete such an Office and have in its place instead a ‘toothless poodle’, the Bank of Guyana,  an institution that has proven in the recent past to be inept as it relates to oversight of the financial sector, is but a vindication that the Bharrat Jagdeo Government is a cabal of ‘control-freaks.’
Ramjattan said that the Minister of Finance was rather ‘bald and bare’ in outlining the rationale behind the transfer adding that in the accompanying explanatory memorandum. “We see nothing therein to give confidence that this transfer is for a greater independence and more scrupulous scrutiny of the insurance industry….From my information there was no consultation with the Insurance Association of Guyana about this dramatic shift.”
He added that the current Commissioner of Insurance who is indisposed was doing her job diligently and it was Central Bank that should have stopped the transfer of funds by Colonial Life Insurance Company (CLICO) Guyana Limited when it reached its limit as it relates to what is supposed to be statutorily maintained in Guyana.
He noted that in view of the Central Bank’s ineptness such a transfer of scrutiny has to be greeted with suspicion.
Additionally, he questioned, “How will the Bank of Guyana manage to deal with all the multiple matters and challenges it is confronted with from commercial banks, the NBS and money laundering…It has always been overburdened…And we know it does not have the expertise and the resources to meet these existing challenges…Why does it want these added chores?…Seems sinister to me.”
The AFC Chairman said that support for the Bill will have to be based on the explanation that will be provided by the Finance Minister given that the Bill was drafted in isolation of the AFC.  The Office of the Commissioner of Insurance (OCI) was constitutionally formed under the mandate of the Insurance Act of 1998, which became operational on December 18, 2002. The Commissioner is appointed by the Minister of Finance and reports directly to the Minister.  The OCI was geared to “To regulate and supervise insurance and pension participants’ activities, with integrity and efficiency, and in so doing help to promote and enhance the reputation of the industry as a cornerstone to the development of Guyana.”
The operations of the OCI are paid for by government and industry contributions. The intention is for the OCI to become largely self-financed and the legislation allows the industry’s main participants to be assessed or pay regular fees to this end.
The current Commissioner of Insurance is Maria van Beek who was recently shot and is now recovering.  She was appointed Judicial Manager of the Colonial Life Insurance Company (CLICO) Guyana on February 25 this year.

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