JIS News

The importance of the status of owners, operators and managers of insurance companies, consistent with the fit and proper stipulations in the Insurance Act (2001) of Jamaica, has been underscored by the Financial Services Commission (FSC).
Speaking at a recent seminar, which the organization hosted in Kingston, on the topic: ‘Fit & Proper Requirements for Insurance Companies’, the FSC’s Senior Insurance Analyst, Rosemarie Connolley-Panton, stressed the need for key management figures being “fit and proper,” in order to be deemed suitable to operate such institutions.
“Section 11(1e) of the Insurance Act requires that each person who manages or controls an insurance company must be fit and proper,” she explained.
Additionally, she said the International Association of Insurance Supervisors (IAIS), which represents insurance regulators and supervisors, sets principles “fundamental to effective insurance supervision.”
“The IAIS has 28 principles, and core principle number seven actually looks at the suitability of persons who work in the insurance industry. It requires that the ‘significant owners, board members, senior management, auditors, and actuaries be fit and proper to fulfill their roles.’ This, therefore, requires that they possess the appropriate integrity, competency, experience, and qualifications,” Mrs. Connolley-Panton outlined.
She explained that fit and proper controls for insurance companies are necessary for the protection of policyholders as well as ensuring that persons deemed “unsuitable” are not able to assume control of a company.
“The business of insurance is based on trust.Policyholders rely on persons in insurance companies to be honest (and) to have integrity, because they don’t have the knowledge base that the insurance persons have. Accordingly, persons who manage or control companies must discharge their responsibilities with integrity,” she emphasized.
She warned that, “persons who are (declared) unsuitable can end up abusing the trust of policyholders. Therefore, the process (of fit and proper assessments) seeks to prevent persons who are unsuitable from entering the business. They also ensure that persons controlling the company are competent, have the experience, adequate training, and are knowledgeable (and), therefore, can execute their jobs professionally, thereby protecting the consumer.”
These, she said, will lead to risk management and appropriate pricing being instituted, and result in capitalization of the business. “Anywhere these are lacking, then the solvency of a company can be threatened, and that can impact on the company’s ability to pay its creditors and also (its) policyholders,” she added.
Fit and proper requirements, according to the FSC executive, are applicable to “persons who can influence decision making in a company.”
“Significant owners.persons who hold at least 10 per cent of the company shares; they have voting rights, due to their share holdings and they have the power to appoint or remove directors. We also look at your directors – managing, executive, and non-executive – senior managers, and sales representatives,” she explained.
Mrs. Connolley-Panton pointed out that the Commission expects that anyone in the company capable of binding the entity into contract, either alone or as a part of senior management team, such as those mentioned, should be fit and proper. “We have to bear in mind that the FSC’s mandate is to protect policyholders, therefore companies must be prudently and wisely managed. We think persons will take their responsibilities more seriously, and so we say persons are to be fit and proper,” Mrs. Connolley-Panton said.
In order to undergo the assessment, she pointed out that the relevant parties are required to fill out and submit the fit and proper questionnaire, which can be downloaded from the organization’s website – www.fscjamaica.org. This, she added, should be accompanied by a police report, and an updated resume.
“If the individual has worked overseas for a minimum of three to five years, then that person will be required to get an overseas police record. If the individual was in the financial sector overseas, as well, for approximately two years and they were in a senior management position, then that person will also be required to get an overseas police record.. You can see the necessity of doing that, because we don’t know what is happening overseas,” the FSC executive said.
Mrs. Connolley-Panton pointed out that, pursuant to section 2(3) of the Insurance Act, the FSC is obliged to conduct their own assessment of persons applying for fit and proper status. Some of the key factors that the Commission looks for, include whether the person is of sound integrity, is competent to do the job; has a criminal record, which may involve dishonesty; is of sound probity, and has a track record in business failures.
“We do a very extensive check on the individual applying. Initially, we do an assessment, when the applicants are just being employed to the organization. The FSC has also introduced triennial assessment and this is where, every three years, individuals have to resubmit a new police record, a new fit and proper questionnaire, and an updated resume. This is so because the situation of a person may change without the regulator knowing. So we have to keep abreast of what is happening with persons,” she outlined. Additionally, she said the FSC is involved in ongoing assessments, which entail the Commission visiting companies and examining their records.
“When we do an on-site and off-site examination, we look at Board minutes, (and) corporate governance minutes to see if the directors and senior managers are doing what they are supposed to be doing (and) are acting in the best interest of the policyholders (and) whether transactions are being conducted in the best interest of the company,” the FSC executive explained.
Where persons are deemed not fit and proper, Mrs. Connolley-Panton said the FSC may direct the companies to remove those persons from positions held. “And if it’s a sales representative, the FSC can actually cancel the registration of that person,” she added.The Senior Analyst was quick to point out, however, that pursuant to section 140 of the Insurance Act, where such a case arises, the aggrieved party can contest the decision before a special Appeal Tribunal, “within 30 days of being notified of the action, decision, ruling, direction, order, or proposal.” Additionally, she said the Tribunal has the authority to either confirm or reverse any decision that the FSC takes.
“Anybody who is not declared fit and proper by the FSC will not be allowed to work in the insurance sector. However, the FSC may consider another application from the person after three years,” Mrs. Connolley-Panton said.