When parliamentarians return from their summer recess, they will be tackling the bill to revise the law regulating the insurance business, one of the most important segments of the financial services sector.
Registrar of Insurance, Dr. Roger Brown, said in an interview with the Guardian, at the Registry’s offices in Dockendale, that the new legislation would give the regulator “greater operational independence.”
“The legislation would create a corporation, similar to the Securities Commission,” he said.
That single change would allow the registry to act more like a regulator, particularly in its ability to sanction those who contravene the act, without requiring the Minister to begin the sanctioning process, as is currently the case.
Presently, in a process that appears cumbersome and patronising, the regulator cannot act against an insurance company for an infraction. The regulator merely gathers the information, makes its recommendations and forward these to the Minister with responsibility for Insurance, in this case the Minister of Financial Services and Investment, who then authorises the regulator to enforce the sanctions.
The arrangement suggests, that the regulatory body is not capable of enforcing sanctions, against the offending company.
Another expected key achievement, will be increased consumer protection and education about the
industry, particularly the relationship between the broker and the agent.
Both Dr. Brown and Deputy Registrar, Pauline Sherman, acknowledged the combining of the broker and agent in a single entity, as a problem inherent in the system.
“The broker represents the client and the agent represents the insurer,” Dr. Brown stated. “In some jurisdictions no one entity is allowed to be both broker and agent,” he added, “but in The Bahamas, you have a situation that has evolved in which you have a single entity as both broker and agent, and you can be licenced as such.”
He said, when a client walks into a company looking for coverage, if the company is wearing its broker hat, then “theoretically as a broker,” it should look for the best possible contract for the client but if the company is also an agent, then it can simply write the contract without necessarily shopping around.
The Deputy Registrar said, the new legislation will address these anomalies but that public education, will be important.
“The new legislation is attempting to solve that problem,” the Deputy Registrar said. “When the client walks in, he should be able to say I want the broker to come back to me with the best rates available, rather than have the agent just place it with the insurer, who gives him the highest commission.”
She said, once the client requests the broker’s services, he or she knows they have to come back to the client with a list of offers, from which the client can choose.
They both acknowledged that consumer education would be an important component of the registry’s activities, when the new legislation is enacted.
Regarding the protection of the Bahamian insurance industry, Dr. Brown said, there was no explicit policy articulated by the government, but that there was a policy on the books.
“There is a policy on the books, known as pre-emptive rights,” Dr. Brown explained. “It allows Bahamians or Bahamian companies to have first right of refusal, when a portfolio comes on the market, but that policy is being debated even as we speak.”
He said that both the government and the industry, were in dialogue on the preemptive rights policy.
“We have never put up obstacles to any company wishing to come in, as long as they brought in the capital,” he stated.
By: By C. E. HUGGINS, Senior Writer, The Nassau Guardian
