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Disagreement, finger-pointing over failed insurance bill

There is disagreement over the meaning of changes that the Grenada government wants to apply to the local insurance industry.

The changes, proposed under the Insurance Amendment Bill (IAB), call for insurance companies conducting “longterm insurance business’’ in Grenada to pay a deposit of $500,000 to the Grenada Authority for the Regulation of Financial Institutions (GARFIN).

It also would lead to the imposition of a one percent levy on insurance companies and associations of insurance underwriters.

So far, however, the government has failed to get political backing for the IAB, and – at best – insurance executives are lukewarm to the changes.

When Finance Minister Nazim Burke presented the IAB to the House of Representatives on July 20, the bill was defeated in a 6 – 5 vote.

Opposition leader Keith Mitchell voted against the IAB, as did his New National Party colleagues Elvin Nimrod, Roland Bhola and Clarice Modeste-Curwen.

Also joining the vote against the IAB were former ministers and National Democratic Congress (NDC) MPs Michael Church and Karl Hood, who are now parliamentary backbenchers.

The IAB measures were supported by Burke; Prime Minister Tillman Thomas; Agriculture Minister Denis Lett; Youth Empowerment and Sports Minister Patrick Simmons; and Housing Minister Alleyne Walker.

The remaining four MPs – Sylvester Quarless, Glynis Roberts, Peter David and Joseph Gilbert – were absent during the parliamentary vote.

The immediate fallout from the vote was political acrimony and finger-pointing.

Prime Minister Thomas, who is leader of the NDC, described as “unfortunate, the decision by Hood and Church to vote down the IAB.

He claimed that the two NDC backbenchers voted against a measure intended to regulate the insurance industry “to protect the small person.’’

“All over, everybody is talking about regulation to protect people and here you have the opposition and two backbenchers voting against regulation,’’ Thomas added. “They have refused to protect the people of Grenada and there is no excuse for that.’’

Burke, who is deputy NDC leader, told a party rally in St. Andrew that the voting by Hood and Church was a case “ignorance’’ combined with “mischief.’’

But NDC Public Relations Officer, Arley Gill, blamed what he called arrogance by some party colleagues for the parliamentary defeat of the IAB.

Gill, commenting on an NDC radio program hosted weekly on WEE FM, said the government “must do a better job at managing the affairs of the House of Representatives.”

He argued that Burke, as Leader of Government Business in the House of Representatives, had failed to reach out to the backbenchers that include David and Gilbert.

“The government cannot throw stones at the backbenchers and then expect automatic support,” said Gill, a former senator who once served as Minister of Culture.

He said the backbenchers who are not in cabinet should be given special briefings on government’s legislative agenda.

It is during that process, Gill said, that the government will then sense whether it has support going forward, “rather than presenting a bill which will end up with a government embarrassment.”

Veteran insurance executive Ronald Hughes, managing director of TransNemwil, supports the measures included in the IAB and believes that some version of the bill will be passed in parliament in the future.

Other insurance officials say their contention with the IAB was government’s claim that it is intended to protect policyholders.

They point out that insurance companies, as a precaution against insolvency, already have reinsurance and millions of dollars in reserves to be used solely for repayment of policyholders.

According to the officials, the IAB measures are primarily aimed at assisting GARFIN which is in a deficit and also needs more cash to meet operating expenses, as well as to fulfill a plan to move out of its rented premises and establish headquarters of its own.

They point to an April 10 circular to insurance companies from GARFIN executive director, Angus Smith, and titled, “Proposal for the Funding of GARFIN’’.

It said cabinet had considered “various proposals for the funding of GARFIN’’, and had approved the one percent levy and the $500,000 deposit by insurance companies.

Smith, in another circular on June 27, advised that subject to any parliamentary delays, the IAB “should become effective by end July.’’

“This means that the levy would become payable on premiums collected from the month of August with the first payment to GARFIN being due in September 2012,’’ Smith said in the circular coped to Timothy Antoine, GARFIN’s chairman.

Antoine is also permanent secretary in the Ministry of Finance.

The Association of Grenada Insurance Companies (AGIC), meanwhile, has reiterated its support for the work of GARFIN which was established five years ago.

GARFIN’s regulates the non-bank sector that includes insurance companies, credit unions, international financial services, and money services.

“With the creation of GARFIN in 2007, supervision of the non-bank financial sector was significantly strengthened, an essential element in ensuring the safety and soundness of this sector,’’ Antoine has said. “It is expected that as GARFIN develops an effective supervisory regime, consumer confidence will accordingly increase to the benefit of all concerned.’’

AGIC says that while individual members may choose to comment on the failed IAB but – as an organization – it has “not met to discuss the matter of the Bill not passing in parliament, and therefore reserves comment for the moment.’’

In a statement, it said that “after AGIC would have met, it is expected that the organization will then meet with GARFIN officials to discuss the Bill and any concerns or questions relating to the contents of the Bill and the way forward.’’

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