More than two years after news first broke of the ill fortunes of the CL Financial group in Trinidad and the subsequent impact on the financial services companies of CLICO Holdings (Barbados) Limited, there has been very little of substance to restore the confidence of the Barbadian public.
One obvious success story has been the purchase by the Barbados Public Workers Co-operative Credit Union Limited of CLICO Mortgage & Finance Company Limited, recently rebranded as CAPITA Financial Services Inc. Government has also finally passed the legislation to establish a Financial Services Commission (FSC) which would regulate and supervise non-bank financial institutions in the country, including insurance companies.
However, not much has been heard of late of the prospects for CLICO International General Insurance Company Limited or, for that matter, CLICO Balanced Fund Inc.
In the meanwhile, the flagship of the group, CLICO International Life Insurance Company Limited, continues to lumber along amidst great uncertainty.
One of the major shortcomings in managing the crisis and restoring public confidence has been the lack of a comprehensive public information strategy to share key information at regular intervals.
It is not clear why Government and the company have not been more proactive in this respect, but we generally appear to have developed a deep-rooted national culture of disregard for public communication and sharing of information that may take several generations to correct.
Notwithstanding the creation of the FSC and the announcement of its first commissioners, very little seems to have been done to strengthen the regulatory environment for domestic or international insurance companies in Barbados.
The FSC will need a reasonable period of time before it can hire staff, become operational, and devise new rules for the insurance sector. In the interim, our insurance regulation lags several years behind global best practices and our insurance regulatory body appears to be severely under-resourced.
This really does not inspire confidence that we have understood and acknowledged the risks and are being proactive in addressing them.
It is also unclear why Government has allowed so much time to elapse between the June 2010 expiry of the term of the Oversight Committee (set up to oversee the operations of the CLICO financial entities and seek out potential buyers) and the appointment of a judicial manager for CLICO Life, or some other arrangement to maintain sufficient control over the actions of the company.
In fact, Government should have moved swiftly at the beginning of the crisis to take control of the CLICO financial services companies by securing the right to appoint their boards of directors and senior management, and should have obtained a secured charge over the assets of other companies in the CLICO group to cover any statutory fund shortfall.
This seemingly casual approach is all the more curious in light of the call of the Oversight Committee’s chairman for a forensic audit of the operations of CLICO Life, and indications by the Commissioner of Police of an investigation into the company’s alleged breach of an order by the Supervisor of Insurance to cease the sale of new policies.
We should also consider the company’s revelation of a run on its policies that led to the payout of more than $180 million in the 14 months to March 2010. How much more has the company been forced to pay out since then, and how does this affect their ability to pay their remaining policyholders?
Once CLICO Life is placed under judicial management, policyholders will have to be patient in what is a complex process that may span several years. To the extent that any resolution to the matter will involve the use of taxpayers’ funds, we can only hope that greater transparency and urgency will be in evidence.
