Insurance Act demands higher standards -- Davies
Monday, December 10, 2001
FINANCE minister, Omar Davies, has said that the regulations of the insurance sector, with the passage of a new law, will demand a higher level of professionalism from all in the industry.
The minister pointed out that the legislation passed by the parliament sets out a new regulatory framework for all participants in the industry.
He said the new regulations would demand a higher level of professionalism from employees, a higher level of fiduciary responsibility from companies and a higher level of accountability to customers and to the regulators.
"These higher levels of performance are non-negotiable and companies and individuals will either have to lift their standards to be equal to the task or they just have to move on. Stricter standards will have to be adhered to by all who are duly licensed to operate in the system," Davies said.
He was speaking over the weekend at the 15th anniversary dinner and awards ceremony of United General Insurance Company (UGI) at the Hilton Kingston Hotel.
The passage of the Insurance Act and a number of other legislations over the last two years, including the Jamaica Deposit Insurance Corporation Act and the Financial Services Corporation (FSC) Act, is to protect tax payers from shouldering the cost of the unscrupulous activities of those who operate in the financial sector.
Government's intervention in the financial sector has been costly, with the FINSAC debt now at $120 billion and Davies said it would take about 20 billion per year to repay the debt, providing that the government could secure long-term loans for 15 years, at concessionary interest rates of 10 per cent per annum.
"Simply to amortise the principal will require an additional $8 billion in debt servicing per annum for the next 15 years, while interest payments will amount to about $12 billion per annum. At a minimum, the country will be faced with an additional $20 billion of debt servicing each year to pay for errors made in the financial sector," he said. .
Despite the country's debt burden, however, the finance minister said the financial sector had recovered from the problems and was in perhaps the best condition of Jamaica's history, with a reduced number of institutions and a stronger and more rigorous regulatory environment.
"The sector is once more on a growth path and this can only redound to the good of the economy," Davies said, noting that during the restructuring "not one policyholder lost a cent".