Progress being made in BAICO collapse matter

A roadmap to address the fallout from the collapse of British American Insurance Company (BAICO) and to some extent Colonial Life Insurance Company (CLICO) may have been crafted at the 53rd Meeting of the OECS Heads of Government in St.Vincent and the Grenadines.{{more}}

At the meeting held at the National Insurance Services on Thursday, May 19 and Friday, May 20, a wide range of issues was discussed, including the sale of the Property Section of British American Insurance Company (BAICO), the launch of the Eastern Caribbean Currency Union British American Insurance Company Health Support Fund, BAICO’s traditional life insurance, the issue of annuitants, and credit unions, indigenous banks and national insurance services that had invested in both insurance companies.

Prime Minister of St. Vincent and the Grenadines Dr. Ralph Gonsalves, head of matters relating to insurance and banking on the BAICO and CLICO issues, disclosed that the OECS Authority through Judicial Management had sold the Property Section of British American Insurance Company (BAICO) to another insurance company. The initiative, he said, allows BAICO’s policy holders to continue them.

This announcement comes on the heels of the launching of the Eastern Caribbean Currency Union British American Insurance Company Health Support Fund, which commenced operation on Wednesday, May 18. The Health Insurance Support Fund was established and funded by the Governments of the ECCU in order to provide financial assistance to persons with unpaid, but valid claims under the following Health Insurance Policies issued by BAICO: Mediflex Plus Standard and Deluxe Plans, Mediflex Silver and Gold Group Insurance, Hospital and Surgical Insurance (Adult and Juvenile), Personal Accident Income Replacer, Hospital & Surgical – Cancer, Mediflex Hospital – Instant Issue (Hospital and Surgical version only), Sickness and Accident Policy – Instant Issue, and Super Shield Cancer Coverage.

On the issue of the Health Support Fund, Gonsalves said the fund is capitalised up to $5 million, but other money can be allocated to it.

“Persons who have had claims for the last two years can make their claims and would be paid. They can make them through British American,” said Gonsalves.

He, however, cautioned that the Health Support Fund is not to be confused with persons who have health problems, who had purchased annuities, and want to cash them to get money to pay for their health situation.

“This is for people who have health insurance policy,” Gonsalves explained.

The Prime Minister said on the matter of BAICO’s traditional life insurance, the Heads had discussed the cost of capitalising this segment, which would take approximately $38 to $40 million. After this is completed, like the Property Section, it will be sold to another insurance company, Gonsalves disclosed.

He explained: “What that would do is that it would make people who have their Life Insurance Policy continue to have it subsisting. It would protect themselves, their families, their insurance policies, which have been used as security loans… . When we take care of that, we will be taking care of 22,000 to 33,000 policy holders.”

Gonsalves stated that when this grouping is catered for, approximately 11,000 annuitants will remain to be dealt with.

Of the 11,000 annuitants, Gonsalves said 80 per cent of them have annuities of about EC$32,000 and less, while the 20 percent mentioned have numbers rising into “several millions”.

Explaining the reason for settling on $32,000 as the bench mark for addressing the issue, Gonsalves said the Government of Trinidad and Tobago has decided to pay annuitants there affected by the insurance fallout some TT$75,000, which is equivalent to about EC$32,000.

He also noted that while the new Government of Trinidad and Tobago is not interested in a previous proposal supported by the Patrick Manning administration, it has agreed to engage the Caribbean Development Bank (CDB), which chairs a committee that involves technical personnel from Trinidad and Tobago and the ECCU, to see how they can fashion a proposal between the ECCU and the twin island state.

Gonsalves said that Trinidad and Tobago does not expect to get involved with the ECCU with a solution, which is more advantageous for nationals of the OECS.

The Prime Minister disclosed that to pay the annuitants with annuities of EC$32,000 or less, it would require a sum of US$20 million. He, however, explained that if the same amount of EC$32,000 is to be paid to the remaining 20 percent, it may require a further US$30 million to compensate them. Gonsalves mentioned that this does not take into account the sums above EC$32,000.

“Some persons who very swiftly went and took a million, two million, three million dollars and just invest it like that, would like a magic wand to be waved in the circumstances; it’s not that easy,” said Gonsalves.

With regard to credit unions, indigenous banks and national insurance services, which have invested in these entities, Gonsalves said there is another approach.(HN)