Strength­en­ing of the reg­u­la­to­ry frame­work to as­sure greater pol­i­cy­hold­er pro­tec­tion,mod­erni­sa­tion the leg­is­la­tion to ef­fec­tive­ly su­per­vise the in­sur­ance in­dus­try and fa­cil­i­ta­tion of the Cen­tral Bank in its pro­mo­tion of ef­fi­cient, fair and trans­par­ent in­sur­ance mar­kets and fi­nan­cial sta­bil­i­ty of the sec­tor are among the key ob­jec­tives of the New In­sur­ance Act which were de­tailed in a we­bi­nar host­ed by the Cen­tral Bank yes­ter­day.

Man­ag­er of In­sur­ance at the Cen­tral Bank Na­tal­ie Roopchands­ingh said that ad­min­is­tra­tive fines can be is­sued for spec­i­fied of­fences un­der the new act.

“There are about 88 of­fences for which ad­min­is­tra­tive fines can be is­sued. There were no ad­min­is­tra­tive fines in the old act and pre­scribed fines were based on sum­ma­ry con­vic­tions.

“The crim­i­nal penal­ty for a breach of the old act was a max­i­mum fine of $5,000 how­ev­er, un­der the new act crim­i­nal penal­ties range from $30,000 to $10,00000,” she ex­plained.

In­spec­tor of Fi­nan­cial In­sti­tu­tions Patrick Solomon not­ed that cur­rent­ly cap­i­tal is in the vicin­i­ty of $1 to $3 mil­lion for a gen­er­al and life com­pa­ny.

“But the new act we are in­creas­ing this to $15 mil­lion. What we call that is de­ter­min­is­tic type of cap­i­tal,” Solomon said.

Asked whether the new cap­i­tal re­quire­ments in­crease the cost of in­sur­ance for con­sumers of in­sur­ance Solomon said with re­spect to the struc­ture of fees for in­ter­me­di­aries the bank al­ways look at the re­quire­ments to pay an­nu­al fees and this is in­clud­ed in the new act.

“But in­sur­ance fees is a com­bi­na­tion of in­ter­na­tion­al ex­pe­ri­ence. If you look at the in­ter­na­tion­al mar­ket we recog­nise that rein­sur­ance rates are in­creas­ing and since rein­sur­ance rates are in­creas­ing to cov­er the loss­es it is on­ly nat­ur­al that if the fees are in­creas­ing in­ter­na­tion­al­ly we will have some in­crease lo­cal­ly. So it’s not nec­es­sar­i­ly as­so­ci­at­ed with the In­sur­ance Act,” Solomon said.

The In­sur­ance Act of 2018 and the In­sur­ance (Amend­ment) Act, 2020 (new Act) came in­to ef­fect on Jan­u­ary 1, 2021.

The pri­ma­ry ob­jec­tive of the Cen­tral Bank un­der the new act is “in re­spect of reg­is­trants, is to main­tain con­fi­dence in, and pro­mote the sound­ness and sta­bil­i­ty of, the fi­nan­cial sys­tem in T&T.”

The bank said close col­lab­o­ra­tion be­tween gen­er­al and a life com­pa­ny/ bank and all stake­hold­ers will fur­ther in­crease and strength­en pub­lic con­fi­dence in the in­sur­ance sec­tor.

It not­ed that ma­jor en­hance­ments to the in­sur­ance leg­is­la­tion will im­prove cor­po­rate gov­er­nance for pol­i­cy­hold­er pro­tec­tion, stronger su­per­vi­so­ry pow­ers and tools for the Cen­tral Bank, greater safe­guards for pol­i­cy­hold­ers’ funds, preser­va­tion of the in­tegri­ty or sound­ness of the fi­nan­cial sec­tor and im­proved stan­dards of mar­ket con­duct to en­sure greater trans­paren­cy in the mar­ket­ing and sales of in­sur­ance prod­ucts.

Re­gard­ing im­proved cor­po­rate gov­er­nance Patrick Solomon, In­spec­tor of Fi­nan­cial In­sti­tu­tions said en­hanced cor­po­rate gov­er­nance is a crit­i­cal pil­lar of fi­nan­cial sta­bil­i­ty.

He said a strong cor­po­rate gov­er­nance frame­work en­sures that the re­la­tion­ships be­tween an in­sur­er’s board, man­age­ment and share­hold­ers are trans­par­ent, fair and bal­anced, re­sult­ing in pru­dent man­age­ment and pro­tec­tion of pol­i­cy­hold­er in­ter­ests.

Ex­am­ples of ob­jec­tives that are achieved by the en­hanced cor­po­rate gov­er­nance re­quire­ments in the new act in­clude in­de­pen­dent and ob­jec­tive over­sight, de­fined re­spon­si­bil­i­ties/ac­count­abil­i­ties re­lat­ed to risk man­age­ment, trans­paren­cy and in­tegri­ty and pru­dent man­age­ment.