Saturday, May 23, 2009

Dominica's PM's address to Tobago insurance company

Distinguished Ladies and Gentlemen, in positions of leadership, there are always so-called ‘hot potato issues’ that one is well advised to leave alone, as there are normally competing perspectives from which only one position can be taken.

The chosen theme of “Political Account, Caribbean Matters” is a prime candidate for such ‘hot potato’ status, wherein I am aware of the possibility of leaving this forum with a couple new friends in this room and around the region, and more so, the likelihood of leaving this forum with less admirers and well wishers than when I came.

The subject matter is, however, of such importance to me as an individual and as a leader of my people that I am prepared to take that risk, even without insurance cover from the organisers of this event.

The political tactician might have taken the high road by seeking to define in great detail each and all of the words contained in the theme. Maybe, that would be the most academically correct thing to do. But while I could proffer an interpretation and remain in orbit away from the central issues of interest to you as practitioners and to the Caribbean public as a whole, I consider this a most useful and timely opportunity to get to the heart of the matter by zeroing in on the conduct of the business of financial services at this time and how in this Caribbean region, the political system has an umbilical connection.

Ladies and Gentlemen, recently we have seen, heard and felt the impact of inadequate regulation of the financial sector.

None of us could have imagined or envisaged the events that have unfolded over the last six months. We followed the news on our televisions and saw the demise of great banks and financial institutions in major financial centres around the globe. Many of our people did not think for a moment that the Caribbean region would be affected.

Some saw the value of real property in the United States of America plummet, and some may have determined that since we had no houses and apartments in the US, they would not have been affected.

What they did not realise was that the economic and financial sectors of the region are closely related to and intertwined with those of the rest of the world. As we have done in so many ways, we have moved beyond our borders and are as much a part of the world as any other large developed country.

In such circumstances, we were to ensure that we had in place the requisite checks and balances so that, as we became exposed to the world that we had also put in place the necessary protection and safeguards. Hence my focus in this address is on the need to strengthen the protection and regulation of the financial sector and in particular the insurance sector in our region.

Insurance, in our parts, is not an end in itself. Our ability to obtain a mortgage is sometimes determined by our ability to secure a life insurance policy. Our ability to drive on the streets of our cities and villages depends on our ability to obtain suitable insurance, if not for ourselves, for other users of our roads.

In an era where the cost of medical services is high, many of us would have no access to those services in the absence of health insurance. Clearly, ladies and gentlemen, insurance products are an integral part of the financial landscape. In fact, we would do well, to identify new products that meet the needs of our people.

The challenges we have faced arose not because insurances are not useful, or because there is little participation, or because policy holders are delinquent. It is my view that these challenges have arisen from inadequate supervision and in some instances the need for greater accountability and transparency in the conduct of the business. And so, failure to regulate that sub sector adequately could very well affect our entire financial system.

By the same token, there is the tendency by some to grudge the insurance industry for what may appear to be or what are proffered by the insurance companies themselves as huge profits, amassed during periods of limited claims. I see this not as something to be denounced but as providing the opportunity to build up adequate shelter for a rainy day.

The very nature of your business demands that you set aside in times of plenty for the period of scarcity when great demands are made on your limited resources. In this manner, I personally have a difficulty with the taxing structure, whereby you are penalised by the financial system for stockpiling that which you need to stockpile in order to honour inevitable claims and commitments down the road.

As one of several voices around the summit table of CARICOM, I would certainly support a proposal that advanced an argument in support of the need for less taxes and other financial impositions on your industry, provided there is a guarantee of said savings going towards a secured and accessible fund for use in times of calamity when demands attributable to economic shock threaten your very existence and continued viability.

Perhaps that proposal could be one of the outcomes of your deliberations, or certainly, the process could begin here in Tobago and be carried forward elsewhere. I am a pragmatist. If the region wants you to step up to the plate and perform better in times of crisis, then the said region may have to leave you with more of your net earnings so as to trigger and enable that heightened role and responsibility.

Now, there is the view by some, especially in your industry, that strong supervision is tantamount to control.
I disagree! I go further to say that supervision of activities which have such a direct impact on the quality of life of our people is an absolute necessity.

It is not satisfactory that when the average citizen of our region invests in a life policy, that all of his or her contributions may be put at risk because we have not made sufficient effort to ensure that their investment is safe.

By the same token, it is not satisfactory, that we do not provide sufficient information to our people so that they can understand the products and services that they are being offered. It is also not satisfactory that we do not require adequate reserves to ensure that compensation can be paid when the need arises.

I continue further. It is not satisfactory, that service providers are not made accountable for the quality of the services they provide. It cannot be accepted that a variety of services which bear no resemblance to insurance services are offered under the guise of insurance products.

Ladies and Gentlemen, our governments ought to exercise their minds on the policies which they must adopt to give our people confidence that when investments are made in insurance products, on the one hand these are in fact insurance products and on the other that these investments are safe.

The inter-related nature of the financial sector in the Caribbean requires that there is some level of consistency between and compatibility of our legislative framework. Our standards and best practices should be equivalent, if not the same.

In other words, we must ensure that all citizens are protected regardless of who they are or where their insurance policies were issued. The countries of the region should not and cannot operate in one financial space and have rules, regulations and standards that are limited to geographical space of one or a few territories.

Furthermore, it should not be that our regulatory framework is so fragmented or different that it allows stakeholders and participants in the sector to take advantage of the loopholes, to the detriment of our people and institutions.

Distinguished Ladies and Gentlemen, issues such as these make a strong case for regional integration. It is on this point that the political involvement becomes important.

As a region we must move ahead in our efforts at integration and meaningful cooperation. Whether we acknowledge it or not, the truth is that our businesses, our financial and economic activities are cross border. We have to ensure that all our systems, including our regulatory systems, follow the same cue.

I must commend regional governments and institutions for approaching and attempting to resolve ongoing insurance sector challenges as a regional issue. I have no doubt that such efforts are much more beneficial to the people of the region than if we had tried to resolve such matters at the individual country level. I dare say, it may not even be possible to do so at the individual country level.

Going forward we must ensure that we provide the framework for minimising the probability of recurrence and in the event of such unfortunate circumstances repeating themselves, that challenges are resolved in a prompt and efficient manner, due to the presence of clearly defined procedures for so doing.

Our challenge as Caribbean people is to see beyond these events; to use the shortcomings of the past to build a stronger future. I have no doubt that our successes will be greater if we seek to resolve these challenges together.

Distinguished Ladies and Gentlemen, I thank you for the opportunity to address this forum. I wish you God’s Guidance and success in your deliberations over the next few days.

I thank you.

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Very, very good speech. Dominica you are blessed to have a PM like this
Well done my PM. You are answering the critics and naysayers in every respect.

Excellent Speech

God is with you and Dominica

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