Local content high on agenda as Bank of Guyana meets Local Insurance Companies

Aug 25, 2022 News

Kaieteur News – The Bank of Guyana is expected to meet with local insurance companies today in a bid to strengthen local content in that particular area of business.

Bank Governor, Gobind Ganga, confirmed the engagement to the Kaieteur News yesterday and explained that the meeting will deal with proposals from the local sector regarding its involvement in local content. The Governor did not release much information, but he did say that, “They (insurance companies) are proposing a new approach to local content.” When asked if the meeting will involve discussions on having insurance policies for the local oil and gas sector in country, he maintained that the meeting will deal with the sector’s proposals on how they deal with local content.

As regulator, the Bank of Guyana administers the Insurance Act and thus functions in the adherence of the legislation. The Bank has been involved in conversations regarding the topical issue of insurance coverage for the growing oil and gas sector here. It is for that reason it was suspected that the meeting might be related to oil and gas related insurance being available in-country as required by law.

It is stated that for a foreign company operating here, insurance over a particular amount must be in Guyana. This means that the insurance policy would be covered by local companies as legally required, and as part of the local content idea to have Guyanese companies meaningfully involved within the sector. The contention continues for adequate liability coverage regarding a negative event within the oil and gas sector. The most recent issue however, is whether the insurance policy could be held in Guyana.

Last week, Vice President Bharrat Jagdeo recognised that the insurance policy should be in Guyana, but noted that it might be too big for a local company and that they would have to reinsure. One insurance stakeholder told the newspaper that the Vice President’s argument made little sense because reinsurance is a common feature within the industry. It was said that insurance companies would reinsure parts of policies that they are unable to cover. Reinsurance, it was said, is also done to share risk. Even large well known companies such as London –based, Lloyd’s syndicate, have limitations and would reinsure, the source said.

Additionally, discussions are brewing over the availability of insurance for the US$1.3 billion pipeline to transport natural gas from the Liza Fields in the Stabroek Block to Wales on the West Bank of Demerara. The Vice President had told the media that the insurance coverage is not necessary at this early stage of the projects development since insurance companies would say that nothing was built and that there is nothing to insure. Also, this insurance policy would be required to be in country given the size of the project and the cost that might accompany any possible disaster.
A local insurance firm has thus underscored the need for a policy to be set up to cover liabilities that may occur even before the facility is built. In this regard, it was noted that ‘Construction All Risk’ would be the necessary coverage to protect the project during this developmental stage. This project is being developed to provide cleaner energy at a cheaper cost to the public, the Government has stated.