Enill: Insurance, pension assets valued more than $25 billion

Since the total assets of the insurance and pension sectors exceed $25 billion at December 31, 2002, it is vital that the industry is properly supervised to ensure policyholders’ expectations are met, Conrad Enill, Minister in the Ministry of Finance said on Friday.

He was piloting the Insurance Amendment Act in the House of Representatives. Enill stated that the importance of the Insurance Amendment Bill was that it sought to integrate under the authority of a single regulatory body, the supervision of insurance companies, insurance intermediaries and pension plans administered under the Insurance Act, with other licensed financial institutions registered under the Financial Institutions Act. He said the Bill sought to transfer the supervisory authority from the Supervisor of Insurance to the Central Bank by way of short-term legislative changes to the Insurance Act and amendment to the Financial Institutions Act, the Central Bank Act and the Trinidad and Tobago Free Zones Act.

He noted however that the Bill did not represent the required comprehensive amendments to the Insurance Act, which were necessary to bring the legislation in line with international standards and best practices. He promised that at a later stage and “after dialogue with the industry,” a more comprehensive review of the Insurance Act would be undertaken, taking into consideration the peculiar environment that made up Trinidad and Tobago. Noting that there had been changes in the corporate structures and scale of operations in the insurance industry, Enill stated that as the banking and insurance industries integrate at the corporate and market levels, effective regulation of both industries required that the supervisory mechanism be similarly integrated. “Integrated supervision has therefore become necessary if regulators are to fully meet the challenges of meaningful supervision of the financial conglomerates that have emerged in our financial landscape,” he stated.

Enill stated that the Office of the Supervisor, which would be abolished under the Bill, had been plagued with difficulties over the years which had affected its ability to properly supervise the industry within the scope of the Insurance Act. Chief among these constraints was the inability to attract and retain suitably trained and experienced persons because of the salary scales of supervisory personnel within the Public Service. Apart from the internal difficulties, there was the issue of the lack of adequate material resources furnished in a timely manner which had also impacted negatively on the Office of the Supervisor to readily respond to the supervisory needs of the sector. The Central Bank, Enill said, was independent of the compensation constraints of the Public Service and was better positioned to acquire and retain persons with the requisite competencies to regulate the insurance and pension plan industry.

Furthermore the Central Bank already had an effective supervisory infrastructure in place for banking. Enill said the amendments would give the Central Bank the power to register  all insurance companies and insurance intermediaries and the power to cancel the  registration of insurance companies. All payments currently made to the Supervisor and the Controller of Accounts will be made to the Central Bank in the future, he said. Enill stressed that the objective of the Bill were germane to the Government’s commitment to promoting sound financial markets by establishing good macroeconomic conditions and by building institutions.