Insurance industry reduced to mere bystanders

Dec 10, 2022 Letters

Dear Editor,

We wholeheartedly share the frustration of Guyana’s insurance companies over Exxon’s handling of the Yellowtail project insurance ‘tender.’

Since our first visit to Georgetown in 2018, we have encouraged the local market that they can and should have a real and meaningful role in the insurance of all oil and gas projects in Guyana. It has, therefore, been heartening to see the progress being made with the establishment of the local insurance consortium, which seems the right vehicle to act as the local carrier for these risks. As the contributor to your article so rightly recognises, local industry involvement is essential to protect Guyanese assets on behalf of the Government. Furthermore, there can be no real knowledge or skills transfer if local insurers are reduced to a fronting role, much less any capacity growth or commensurate commission earnings.

Whilst perhaps not surprising, it is nevertheless objectionable that Exxon be permitted to conduct the insurance tender in this manner. The process rides roughshod over the spirit of Guyana’s Local Content Law and reduces the insurance industry to mere bystanders. It simply cannot be right that local companies will fight over a fronting fee of a few thousand dollars when, by rights, they should be earning hundreds of thousands of dollars in reinsurance commissions. This commission is rightly allowed by the international reinsurance market, but without local control of the process will instead be rebated back to Exxon by their international broker. It does not have to be this way. We believe your Insurance Regulator and Government Ministers already have the tools at their disposal to stop Guyana’s insurers being reduced to ‘chicks fighting over feed’! We can only hope they use them.

Sincerely,

Chris Jennings

Operations Director

t +44 (0)207 481 4114

m +44 (0)7765 252 695

Total Risk Solutions

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