BASSETERRE, St. Kitts – THE Insurance Company of the West Indies (ICWI) Jamaica Ltd. has fallen in breach of insurance regulations in that jurisdiction, but President of the ICWI Group Paul Lalor has reassured policyholders that company branches in St. Kitts and Nevis will not be affected.
A recent Minimum Asset Test (MAT) carried out by the Financial Services Commission (FSC) in Jamaica said that to meet regulatory standards each insurance company operating within that jurisdiction must have assets representing at least 135 per cent of its liabilities.
Among the companies that were unable to meet this requirement is ICWI Jamaica Ltd. With the collapse of the British American Insurance Company still fresh in the minds of many Kittitians and Nevisians, concerns quickly spread that the Jamaica-based company would not be able to cover policies held at the local branch.
However, in an interview with SKNVibes, President Lalor attempted allay concern and explained that the St. Kitts and Nevis branch is separately managed and therefore would not be affected by the FSC’s recent report.
“The reality of it is that ICWI Group is made up of four insurance companies: ICWI Cayman Ltd, ICWI Bahamas Ltd, ICWI Jamaica Ltd and Turks Insurance First Insurance Company. They are separate, individually capitalised companies regulated separately in each territory.
“The St. Kitts branch represents the ICWI Cayman Ltd and is simply an independent member of the group of companies. It has its separate board of directors. The St. Kitts ICWI branch is 100% fully compliant with all the regulations of the St. Kitts regulators and with [those in] the Caymans; that is not a problem at all,” the company official said.
Lalor explained that each of the companies has its own reinsurance treaty and is specifically designed in such a way to protect policyholders of the separate entities against catastrophic events that may take place in other territories.
He acknowledged that the Jamaican company was unable to meet the minimum asset requirements, but explained that it was to be expected because of a new reinsurance treaty recently signed there.
Lalor explained, “ICWI Group accepts that its Jamaican arm didn’t make the threshold, but understands the reason why and fully expects that it will meet the threshold in the very near future.”
SKNVibes contacted the representative of the local company, Michael Martin, who was tight-lipped about the matter. In a brief comment he told this media house, “I don’t know if there are implications for the local branch. The matter is being dealt with by the Jamaican Financial Services Commission.”
A statement from the FSC, issued last week explained that while companies like ICWI failed the MAT and are in breach of insurance regulations, ICWI’s MAT result of 130% provides a “relatively strong cushion” for the protection of the company and its policyholders.
“The companies should face no difficulties in meeting their normal claims obligation. The FSC has been in dialogue with the companies on the issue of the MAT and has decided to exercise forbearance in light of the global economic crisis which resulted in significant impairment in the fair values of certain investment assets of some companies.
“In the opinion of the FSC the insurance companies have adequate catastrophe reinsurance cover...” the press statement read.
ICWI President Lalor stressed that the MAT, as it currently stands, does not measure risk or take into account reinsurance. He informed that a minimum capital test is expected to replace the MAT by yearend and will more accurately reflect contingency preparedness for insurance companies.
