Govt. to strengthen insurance sector to prevent another “CLICO”

Apr 27, 2014 News

The systemic failures by the Colonial Life Insurance Company (CLICO) have reinforced the need for enhanced regulation in the insurance sector. As such, drafting of the new Insurance Bill and attendant regulations are currently being finalised.

Finance Minister, Dr. Ashni Singh

This is according to Dr. Ashni Singh, Finance Minister during the recent National Budget 2014 debates in the National Assembly. He said it is anticipated that this Bill will become Law before the end of 2014.
However, despite the significantly negative impact on the industry’s financial strength after the collapse of CLICO in 2008, the insurance industry has since rebounded successfully, Dr. Singh said.
He noted that the recovery of the industry was evident by the significant increase in assets, capital and net premiums from the amounts reported in 2008 when the CLICO crisis hit the industry.
According to Dr. Singh, at the end of 2013, the insurance sector was adequately capitalised in keeping with the requirements of the Insurance Act of 1998. Both the long-term and general insurance sectors had assets in excess of liabilities by 72.3 percent and 103.8 percent respectively.
He noted that this was complimented by the sector’s ability to meet expenses from growth in net premiums. As a result of the industry’s 2013 performance, positive growth in assets, capital and net premiums are also projected for the year 2014, he added.
The Finance Minister said that the industry’s capital also recorded a positive rebound after the CLICO debacle. It boasted an increase of 115 percent or grew to $24.3 billion above the $11.3 billion as at the end of 2008.
“The insurance sector is presently quite solvent and stable, even though the concentration of assets is centered on only a few companies,” he said.
According to Dr. Singh, the supervisory authority, the Bank of Guyana, in its ongoing efforts to foster more disclosure and transparency in the financial sector commenced the publication of the cumulative financial prudential ratios for the licensed financial institutions and the industry on its website.
In order to further strengthen its supervisory function, the Bank of Guyana issued Supervision Guideline No. 13 (Anti-money Laundering and Countering the Financing of Terrorism) to the licensed financial institutions during 2013, he noted.
“Drafting has also commenced on legislation for pensions to provide more effective supervision and regulation of pension schemes which will help to ensure the sustainability of the system,” he said.