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Finance Minister Howai: New Insurance Bill in two months
Government is expected to introduce the new Insurance Bill in the next two months, said Finance Minister Larry Howai at Wednesday’s formal opening of New India Assurance’s new head office on Victoria Avenue, Port-of-Spain. Howai said Government is working to shore up efficiencies in the legislative framework for the financial sector.
“In the last six months, we have introduced new legislation for the Financial Intelligence Unit of T&T and the new Securities Act, and in the next two months, we intend to introduce the new Insurance Bill,” he said. The minister said there is a dire need for the legislative framework as T&T’s insurance governance regime lags behind some of its Caribbean counterparts. He said Insurance Bill is needed to address the inadequacy of the country's risk management systems as well as the insurance sector’s weak regulatory framework.
“Our objectives are to strengthen the supervisory and regulatory framework, balance the risk and burdens of the sector, reduce moral hazard and make the insurance system more robust,” he said. Howai said the proposed changes in the bill came out of extensive domestic consultations and recommendations from such global agencies as the International Monetary Fund (IMF), which highlighted the need to quickly amend financial legislation and enforce minimum standards for insurance supervision.
Howai said changes in the bill also borrowed heavily from guidelines on insurance core principles set out by the International Association of Insurance Supervisors. Howai said the bill seeks to improve oversight of the insurance sector by strengthening potential and corporate governance requirements. It also gives the Central Bank of T&T regulatory authority and a wider range of corrective and preventive powers.
The former banker said the bill would introduce new capital requirements and significantly strengthen the financial buffers available to creditors, as well as improve disclosure and promote market discipline. “The changes being proposed can, therefore, be seen as bringing the existing performance Act 1980 up to international best practice,” he said.
Foreign investors' confidence
Howai said New India's $40 million investment in its newly-constructed headquarters reflects the confidence that international investors have in T&T as a destination for capital growth. He said capital deepening projects reflect positively on the long-term potential of the economy.
“While I am happy about this, I am not surprised, as the Government has placed heavy emphasis on fashioning the economic and institutional framework that would attract long-term financial capital formation of this kind, and it is certainly good to have our efforts validated in this way.” Howai said India has a long history of insurance and is a pioneer in the insurance market among developing countries. He said New India Assurance is the largest non-life insurance company in Afro-Asia region, excluding Japan.
“Their performance in T&T has been exemplary. The period 2007-2010 marked by the total assets of non-life insurance in T&T is shrinking at more than an average rate of three per cent. However, New India’s total assets in T&T expanded by approximately 44 per cent over the same period and over an average rate of 13 per cent per year—significantly exceeding the performance of the rest of the market.
“This is testimony of New India commitment to excellence,” Howai said. He said while good regulation is one part of an efficient rational financial system, the setbacks the industry has faced reminded the Government that an ideal financial system is also made up of firms which adhere to the rules. Howai said the Government has always held the view that the financial sector plays a significant role in T&T's journey to a stable economic development.
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