Whistle-blowing roles for directors and provisions for independent directors in insurance companies are among aspects of upcoming legislation governing the insurance sector, Finance Minister Winston Dookeran told Parliament yesterday. His disclosure about a new Insurance Bill followed a break in the Clico-HCU inquiry where revelations about group operations have turned up startling information in recent months. The new law will significantly improve oversight of insurance companies and the financial system and is geared to protect the policyholder. Dookeran said T&T's 32 insurance companies, major contributors to domestic economic activity, have assets which account for 26 per cent of GDP up to June 2011.
He said there are currently no prescribed actuarial standards for insurance companies in T&T. However upcoming legislation will be a significantly overhaul the 1980 Insurance Act, he said. The legislation will ensure best practice for companies to hold adequate reserves to protect policyholders. To ensure directors and management of companies take seriously their fiduciary obligations to protect policyholders' funds, Dookeran said the bill includes additional requirements for composition of audit committees including the need for independent directors and whistle-blowing roles for directors, auditors and actuaries. It provides for access by regulators to auditors' working papers and more affective measures of assessing fit and proper requirements for directors and officers.
Dookeran said the bill protects insurers from group contagion risk and would separate financial and non-financial activities of a group. "This bill proposes a risk-based capital regime which would ensure that insurance companies that want to take on greater risk must put up sufficient capital to cover those risks," he added. Under the new regime, insurance companies would also need to hold hundreds of millions in additional regulatory capital. Dookeran said that this was a significant departure from the past and would help companies mitigate their risk exposure.
Central Bank will also have widened powers of supervision and scrutiny and would promote compliance with a wider range of corrective measures. Central Bank will also impose fines, Dookeran said. There will be stiffer penalties for breach of provisions and the ability to remove directors, auditors and actuaries. The bill also proposes to introduce methodology to test the adequacy of outstanding claims liabilities particularly for motor insurance claims.
