- The Insurance Association of Jamaica (IAJ) is hailing the work of the Financial Services Commission (FSC) in ensuring the integrity of the insurance industry.
- Association President, Hugh Reid, said that the FSC has brought high standards and best practices to the insurance sector.
- The establishment of the FSC has addressed some major issues that affected the industry for years.
The Insurance Association of Jamaica (IAJ) is hailing the work of the Financial Services Commission (FSC) in ensuring the integrity of the insurance industry and protecting the interests of Jamaicans over its 12 years of existence.
In an interview with JIS News, the Association’s President, Hugh Reid, who is also President of Scotia Jamaica Life Insurance Company, said that the FSC, which was set up in the wake of the financial crisis of the 1990’s, has brought high standards and best practices to the insurance sector.
He noted that the establishment of the FSC has addressed some major issues that affected the industry for years. “It has also brought to the governance of the industry, an improved legislative structure and improved staffing over what obtained with the previous regulator, the Superintendent of Insurance. This has helped with periodic inspections and has facilitated a comprehensive review of the reporting that was required of the licensee and as such, has enabled the FSC to do its job of regulatory supervision well,” he stated.
The FSC came into existence on August 2, 2001 by virtue of the Financial Services Commission Act, replacing the previous Act, which dated back to 1972. It replaced the Office of the Superintendent of Insurance and Unit Trusts and the Securities Commission.
It has responsibility for supervision and regulation of the securities, insurance and private pensions industries, and as such it may be properly described as an integrated financial services regulator.
Underscoring the FSC’s role in the regulation of the insurance industry, Mr. Reid, said that the Commission has instituted a framework, which ensures that only persons, who can demonstrate that they are fit and proper, can be employed in the sector. As such, he said, only persons of proven integrity are in positions of influence and authority in the insurance business.
He noted that the FSC’s affiliation with international bodies such as the International Association of Insurance Supervisors, means that “it is in a position to properly regulate and bring international best practice standards to the governance of the insurance industry.”
Mr. Reid said the “signal indicator” of the benefit of regulation to the insurance industry is the fact that following the global financial crisis of 2008, there was no significant impact on general or life insurance companies in Jamaica.
This, he said, is due to the fact that companies are required to meet regulatory capital requirements, which demonstrate their long-term ability to pay claims.
“Simply put”, he said “each company must carry a certain amount of capital to attend to any change that may arise in an economy.”
Turning to the FSC’s regulation of the pensions industry, Mr. Reid said some significant changes have come about as a result of the FSC’s supervision.
These include rules about conflict of interest regarding management of funds; the availability of funds to terminally ill contributors to allow for their comfort in their final days; and the fact that it is now mandatory for actuaries to review and opine on pension plans.
Mr. Reid said that prior to the establishment of the FSC, an actuary was not required by law to review pension plans.
He noted that the new Pensions Act, instituted in 2004, is an important piece of legislation because it allows for a new framework for private sector pensions by establishing approved retirement schemes.
“It enables self-employed persons to deduct up to 20 per cent of their income tax-free to fund their own pensions. This was a revolutionary piece of legislation because self-employed persons now have the legislative framework to contribute more to their pensions than those who are employed,” Mr. Reid stated.