2010 IABA ANNUAL MEETING
MILLENNIUM BROADWAY HOTEL
NEW YOR CITY, USA
INSURANCE REFORM IN THE
E.S. CARIBBEAN
By. W. St. Elmo Whyte
Opening Remarks
Many small Islands
Includes large (L.M.) Guyana
Small populations
Jamaica
3 mil
Trinidad and Tobago
1 mil
Guyana
0.75 mil
Barbados
0.25 mil
Former Colonies of UK

Opening Remarks (Cont’d)
Laws “looked like” UK laws long ago
 Most now Independent
 Overall population 7 to 8 mil
 Insurance (A.T.) very popular
 General knowledge good
* Covers Life, Health, P & C, Pensions
 Jamaica as Model
 Comments on others

Background
(prior to 1998) Before Reform
Jamaica
Weak Legislation
- Life, Health P & C
 None for Pensions
 Capital Requirements – Law
 Premium Rates
 Reserving/Valuation Bases
 Asset/Liability Management
 Investments

*Supervision
Superintendent of Insurance
 Low
keyed
 Poorly staffed
 Never pro-active
 Returns of Industry always behind
All the above applied throughout the
region
Drivers of the Crisis
 General
Comments
 Mainly in Life, Health and Pension
 Life Companies/Pension/Profitability
 Expansion
Written Business
Asset
Conglomerates – Banks, Hotels, P/C, etc
Low capital!
Products: TP to Unit Linked
High S.T.I.R. Guarantees
Massive mismatch of A/L
Extensive Borrowing
- including inter-group
- segregated Pension Funds
Mis-selling
*Stock Market Boom / “Bust”
Staffing: MBA’s
Role of Actuary
* Dominance Risk
* Poor Risk Management
Liquidity Problems
 G.E.M.:
High Interest Rate Policy
 Solvency Problems
 Mighty Crash of EFS excluding one
large Bank (BNS) and one small Life
Company – MGB
 Actuaries lost face
 Government Intervention
 Capitalization
Change of Management
Consolidation
9 LOC to 2
2 BA to 2
Sale to new owners
The above:
Never happened in Barbados or Guyana
Not in Trinidad until recently
- One very large company
- Same behaviour as those companies in
Jamaica
The Reform Process (1998-2004)
Was part of reform of the Financial Sector
- All FS crashed!
- World bank and IMF involved
- Foreign consultants, mainly Canadians
- Modified Insurance Act
- New Pensioners Act
- CAA played vital role
- Creation of FSC
-Powerful
- Well staffed
High Profile
Very inter-active
Insurance Act 2001
- Capital (Reg, MCCSR) RB
- Products (B,A,L,P, NPP)
- Actuary – explicit duties for AA
- Premiums – Profit Testing Annually
- Reserving (Policy Premium Method)
-Valuation Method
- Investments (A/L Modelling)
- Other Important Areas covered
- Administration and Accounting
- Corporate Governance
- Investigations by FSC
- Winding-up
- Insurance Intermediaries
- Insurance Contributory Fund
- Overall, Legislation/Supervision
have both been substantially
strengthened for L, H, P&C
Pensions Act 2004
 First
such Act
 Group & Individual covered
 Tax concessions
 Conditions for approval
 Registration and licencing
 Fit and proper person criteria
 Administration
Pensions Act 2004 (Cont’d)
 Investment
Managers
 Actuary
 Auditor
 Investigations
by FSC
 Investments
 Trustees
 Actuarial
 Auditing
 Penalties
Valuations
Reform process is now in progress in
T&T
Jamaica is used as example
Central Bank shall supervise
Actuaries being employed
- Not much information about other
islands
Co nclusion
Today in Jamaica
- Reform continuing
- Fewer companies
- Fewer Pension Plans
- Fewer Insurance Intermediaries
- Stronger companies
- Better management
- Confidence returned
- Life companies foreign owned but within
CARICOM
- CAA playing a vital role
- General comments