CIC Insurance Brokers has been called in to the Central Bank to discuss an alleged breach of the Insurance Act, multiple industry sources have confirmed. The Central Bank has been trying to get to the bottom of allegations that CIC, a 40-year-old insurance brokerage company, rebated commission to secure an advantage in their quotation for a lucrative contract to Point Villas Ltd. The Insurance Act makes it illegal for an insurance broker to rebate commissions, which means to pay a client a percentage of the commission without the knowledge of the insurance company. That contract, the T&T Guardian understands, attracted intense competition in the local insurance market.
CIC's breach was reported to the Insurance Brokers Association, which initiated an investigation into the alleged breach. Subsequently, the Guardian understands that chief executive Patrick Ferreira was sent on leave by CIC's board on May 9. CIC's chairman Anthony Hosang confirmed to the T&T Guardian that CIC did meet with the Brokers Association, but did not provide any details on the incident. Hosang said CIC was following proper procedure in dealing with this matter. Ferreira told the Guardian that CIC was invited by Point Villas Ltd, along with many other insurance brokers sometime last year to submit a quote for homeowners requirements.
Point Villas Ltd is a 100-unit gated compound in Lange Park, Chaguanas. Ferreira said the finalisation of the material policy and its placement was done when he was out of the country and, as such, he played no part in the finalisation of the insurance coverage that has now been called into question. "When the insurance was placed, a proposal featuring an administrative fee to be charged by the client was submitted and accepted. These events all took place on October 21, 2010," he said. He said he returned to T&T in the following week and met a concluded arrangement which he never negotiated. Ferreira observed that it was an incumbent insurance brokerage firm, which lost the Point Villas Ltd account, that "complained to the regulator, Central Bank and the Insurance Brokers Association."
Ferreira said a detailed response was sent off to the Brokers Association "and CIC considered the matter closed as far as the Association was concerned." "The Central Bank did advise that a complaint was received and CIC was asked to submit documents, which it did right away," he said. Ferreira said he was sent on leave due to disagreements with the board at a meeting held on May 6 pending an internal audit exercise. His contract with the company was officially terminated last week. CIC had registered Ferreira, who is also on CIC's board, as their principal officer with the Central Bank. The Guardian understands his leave means that they have no formal officer in this position and, as such, they may be in breach of the regulations with a possibility that their license could be suspended.
CIC's corporate secretary, Sita Ali, is now acting chief executive. CIC informed staff this week that it would stop writing new business pending the resolution of its issues. Further, the Guardian learnt, that Conrad Aleong, former chief executive of BWIA, has been retained by the company this week as a consultant. On February 4, CIC Insurance Brokers was awarded a three-year contract by CAL when the request for proposals (RFP) asked for a two-year engagement. That contract, to provide employee benefits brokerage and consulting services at CAL, is being reviewed.
Insurance Act, 1980
Section 105 (1)
Rebating
'No insurer and no officer, employee or agent of an insurer and no broker or salesman shall directly or indirectly
-(a) make or attempt to make an agreement as to the premium to be paid for a policy other than as specified in the policy;
-(b) pay, allow or give or offer or agree to pay, allow or give a rebate of the whole or part of the premium stipulated by the policy or any other consideration or thing of value intended to be in the nature of a rebate of premium to any person who is insured or is applying for insurance in respect of life, person or property in T&T.
Section 105 (2)
An insurer or any other person who contravenes the provisions of Sub-section 1 is guilty of an offence.