Leon Anderson

Senior Director of Insurance

Financial Services Commission, Jamaica September 21-

22, 2006

FINANCIAL SERVICES

COMMISSION

CAIRANNUAL

CONFERENCE2006

INTERVENTION & ENFORCEMENTTHE JAMAICAN EXPERIENCE

Agenda• The Legislation• Trigger for intervention• Enforcement procedure• Impact on the industry • Impact on policyholders• Post Mortem• Lessons learnt

– Upgrade regulatory framework

– Rehabilitate the industry

– Establish new regulatory body - FSC

INTERVENTION & ENFORCEMENTTHE JAMAICAN EXPERIENCE

Major Legislative Provisions• The power to regulate and intervene• Legislative enforcement actions :

– Prosecution– Restrict scope of business– Impose limitations on a number of activities, e.g. acceptance of new business– Prohibit the company from soliciting new business or entering into other transaction

or class of transaction– Removal of director or manager– Assume temporary management– Suspend or cancel registration

– Petition the court for winding up order to liquidate the company

INTERVENTION & ENFORCEMENTTHE JAMAICAN EXPERIENCE

Trigger for Intervention• Breach of the legislation• Failure to comply with an order• Failure to comply with directions• Fit and Proper concerns• Pending insolvency

INTERVENTION & ENFORCEMENTTHE JAMAICAN EXPERIENCE

Enforcement Procedure• Opportunity to be heard given to directors &

managers• Directors’ undertaking to take corrective actions• Directions• Cease and desist order• Prosecution• Suspension/cancellation of registration• Temporary Management• Liquidation

INTERVENTION & ENFORCEMENTTHE JAMAICAN EXPERIENCE

Impact on the Industry

• The collapse in the 1990’s refocused the industry into accepting the need for regulation

• The collapse of Dyoll was not as a result of poor management - catastrophe

• Increased appreciation of reinsurance models and contents of treaties

• Heightened appreciation for strong capital• Merger talks or rumours of talks • Review of business operations by companies

INTERVENTION & ENFORCEMENTTHE JAMAICAN EXPERIENCE

Impact on PolicyholdersTHE DYOLL EXPERIENCE

• Shaken confidence in insurance• Policyholder ignorance of the facts due to lack

of information• No fall out – policyholders were protected

INTERVENTION & ENFORCEMENTTHE JAMAICAN EXPERIENCE

Post Mortem• Could the regulator have intervened earlier?• The secrecy provisions of the FSC Act prevented the

regulator from commenting publicly on rumours that the company was insolvent

• What about disclosures to the Stock Exchange? – conflict of interest on the part of the regulator.

• Inexperience in dealing with cross border insolvency and temporary management and liquidation

• Expose the need for improved knowledge of reinsurance regulation

• The increase in regulatory resources was acknowledged

INTERVENTION & ENFORCEMENTTHE JAMAICAN EXPERIENCE

Lessons Learnt

• Be more proactive; seek information aggressively

• The need for improved reinsurance regulation• The need for proper documentation and

written communication• Improve Public information

THANK YOU

For Your Attention & Participation