St. George’s, July 23, 2012 – Local insurance industry officials have accused the Grenada government of attempting to mislead the public on the real intent of an insurance bill that failed to receive parliamentary approval during a July 20 session of the House of Representatives.
The Insurance Amendment Bill, which was piloted by Finance Minister Nazim Burke, was defeated in a dramatic parliamentary vote.
MPs Karl Hood and Michael Church – two former ministers now sitting as government backbenchers – joined the four opposition New National Party members in the house in a 6 – 5 vote that killed the bill.
Four other MPs of the ruling National Democratic Congress, including two who are backbenchers – were absent during the vote.
Under the changes proposed by the government, companies conducting “longterm insurance business’’ in Grenada would have had to pay a deposit of $500,000 to the Grenada Authority for the Regulation of Financial Institutions (GARFIN).
Another new measure that was recommended was the imposition of a one percent levy on insurance companies and associations of insurance underwriters.
It’s “unfortunate’’ that Hood and Church voted with the opposition against a measure intended to regulate the insurance industry “to protect the small person,’’ Prime Minister Tillman Thomas commented following Friday’s parliamentary sitting.
“All over, everybody is talking about regulation to protect people and here you have the opposition and two backbenchers voting against regulation. They have refused to protect the people of Grenada and there is no excuse for that,” Thomas is quoted as saying in one of two official government statements issued in the immediate aftermath of Friday’s vote.
However, local insurance executives argue that the measures proposed under the Insurance Amendment Bill had nothing to do with protecting Grenadian policyholders and everything to do with GARFIN.
They also dispute a claim by Finance Minister Burke that the measures were introduced for passage in parliament after wide consultation with members of the insurance industry.
“If by wide consultation he means two meetings with the executive director of GARFIN, then Mr. Burke is right,’’ one senior insurance official said.
“GARFIN made it clear,’’ he added, “that like it or not, the levy will be implemented. In fact, notice was given that the levy was taking effect from next month.’’
In a June 27 memo to “insurance companies and insurance intermediaries,’’ GARFIN’s executive director, Angus Smith, advised them that subject to any parliamentary delays, the Insurance Amendment Bill “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 memo that was coped to Timothy Antoine, GARFIN’s chairman.
Antoine is also permanent secretary in the Ministry of Finance.
GARFIN is said to be 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.
“GARFIN really needs the money and cannot get any additional support from the government, which itself has a cash flow problem. They saw the insurance companies as the place to get the money,’’ said the vice-president of one of the larger insurance companies.
He said insurance companies were not in a position to absorb the additional expenses and had let known that it would have to be shared by policyholders.
“In one form or another, we would have had to pass the cost of the new measures on to policyholders and we informed government and GARFIN officials of that,’’ he explained.
