8 months ago
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Today’s article is a spin-off from an Internet search. It began with my attempt to learn how motor insurers select loss adjusters to estimate the pre-accident values of vehicles proposed for comprehensive insurance coverage and measure post-accident repair costs.
Are their procedures transparent, fair, and compliant with industry best practices? What processes do these professionals use to ensure that their opinions can withstand judicial scrutiny and are consistent with the policies’ contractual terms? Can insurers use their market share – and those of their commercial bank ‘bredrin’ that provide motor vehicle loans – to wield undue influence over these small, independently owned service providers and ‘persuade’ them to make decisions that benefit some risk takers and widen the chasm of distrust that is often a feature of insurance transactions?
There is no information on the website of the College of Insurance and Professional Studies, CIPS, that answers questions like these even though a certificate course in motor vehicle loss adjusting is advertised. It is conducted in collaboration with the Jamaican German Automotive School. Details of the course curriculum were, however, not published.
A course on ethics does not appear to be offered.
There were references to the legal framework within which the insurance industry operates. I saw no references to the Financial Services Commission Act 2001; the Insurance Act 2001 and regulations; the Road Traffic Act; the Motor Vehicles Insurance (Third-Party Risks) Act; the February 2019 Revised Market Conduct Guidelines for Insurers and Intermediaries; and the Insurance (Amendment) Regulations 2022. Subjects like climate change, resilience, risk management, cyber risks, artificial intelligence, and concepts like financial inclusion were not mentioned among the course offerings.
Most surprisingly, no information was posted about CIPS’s CEO, the composition of its faculty and their qualifications.
CIPS’s website reflects poorly on this institution and the insurance industry with its many grammatical, spelling and other errors. This is the same educational entity that boasts that it is ‘powered by knowledge, professionalism, and integrity’ and offers ‘high-quality courses and programmes.’ The administrators are unsure about CIPS’s mission.
My virtual ‘walk-about’ led me to last Thursday’s Gleaner article that bank regulator, Bank of Jamaica, BOJ, has finally decided to introduce service standards for automatic banking machines. The first machine was launched locally over three decades ago. The regulator now supervises banks or deposit-taking institutions, and soon, its remit will include non-deposit-taking financial institutions.
I hope that this brief analysis will help the BOJ folks who now direct the Financial Services Commission’s operations, and will offer insights into why the insurance industry has not moved more aggressively into adopting international standards and best practices, except for International Financial Reporting Standard 17, which was foisted on the local market by overseas interests, and will ultimately lead to the formulation of new strategies to improve knowledge, competence, and skills in the industry and help it play a more meaningful role in national development.
The FSC is mandated by Section 6(1) of the Financial Services Commission Act 2001, to promote stability and public confidence in the operations of the financial institutions that it regulates; public understanding of the prescribed institutions; and the modernisation of the financial services with a view to the adoption and maintenance of international standards of competence, efficiency, and competitiveness. Section 6(2)(a) of the law also mandates the commission to ensure that “appropriate standards of conduct and performance are maintained by these institutions”.
Professional qualifications is the first item on the list of requirements described under Section 73 of the Insurance Act that applicants for a licence must satisfy. The law places insufficient attention on employee training and development. For example, it omits the words ‘from a recognised institution’ in Subsection 2(a). Similarly, regulation No. 112 speaks to the educational and experience qualifications for applicants for licences but does not provide any guidance about how these criteria will be met.
Professor Orlando Patterson, in the preface to The Reform of Education in Jamaica 2021 report, wrote that the commission he headed “placed primary emphases on the institutional reform of the Ministry of Education and Youth on teaching and curriculum reform, which comprised the longest sections of our report.”
Other problems in the sector contribute to the country’s problems in education. The functions that are currently being performed by CIPS on behalf of the insurance companies and other entities contribute to the industry’s inability to meet international standards of competence, efficiency, and competitiveness.
Policyholders are unlikely to experience improvements in service delivery in the absence of substantial reforms at CIPS. Unfortunately, the folks at the FSC have failed to make this connection.
Finally, I am sure that there are persons in the insurance industry who will disagree with this analysis. I challenge them to enter into a public debate with me.
Cedric E. Stephens provides independent information and advice about the management of risks and insurance. For free information or counsel, write to: aegis@flowja.com or business@gleanerjm.com
English (US) ·