Commentary: Brokerage Fraternity in Free-Fall

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By Dr Neil Gosine

I WRITE this commentary from the point of view of the insurance brokerage industry and the increasingly more back-breaking regulatory rules imposed by the regulators.

One of the core functions of the Central Bank of Trinidad and Tobago (CBTT) is the supervision of the insurance industry.

The bank tries to maintain a stable financial system by minimising the potential for losses by depositors, policyholders and pension plan members and, of course, this is commendable.

The responsibility for attaining this mandate lies with the Financial Institution Supervision Department (FISD) within the Central Bank. Encouraging the stability of the financial system is of course one of the key directives of the Central Bank.

Section 65(1) of the Insurance Act bestows on the Central Bank, the authority to “at any time intervene in the affairs of a company registered under this Act to carry on insurance business” it allows the governor if he is not satisfied that the company is operating properly to intervene as detailed in Section 65(2).

All insurance companies and insurance brokers are regulated by the CBTT. Insurance brokers pinpoint and organise adequate insurance cover for commercial organisations and private clients. Insurance brokers work together with their clients and insurance companies, sourcing from the insurance companies the best deal of insurance cover for their clients.

Over the last ten years, CBTT has been over-regulating brokers, in my opinion.

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For example, just look at the condition of their headquarters, the Twin Towers for example. The CBTT tower is a rigid, brittle place, anointed with original pieces of art and armed with a battery of new cars in their private car park while their sister tower is run down, scruffy at best, crowded and dingy.

This demonstrates the CBTT divergence of responsibility.

One function as a regulator for financial institutions… Is to regulate… hear the word regulate. Not only to give scorching hot-water mandates all the time to the companies but to also help the industry grow and foster a healthier environment in the brokerage sector by delivering cooling water to allow businesses to grow under their tenure.

In our industry, we are continually bombarded by more and more rules, and ethics of course, plays a large part at all levels, especially at the individual level and business level as the cornerstone of our industry is “utmost good faith”.

However, if the companies cannot afford to implement all the regulations imposed on them we will see the smaller to mid-size brokerage companies failing and closing up shop.

The insurance industry especially the brokerage fraternity is in a free-fall state owing to burdensome and onerous regulations imposed by CBTT in the industry.

What is required at this stage is that they need to bring all parties together like what other international regulators are doing to keep the industry alive and thriving.

Monitoring the banks to give lower credit card rates and cut the cost of transactions to the public is something they should monitor.

Many of our commercial banks have implemented harsher charges to their customers such as they charge for cash and coin deposits over the counter and charge less if the customer chooses to deposit via the night safe. In other words, pay a price for a “safer deposit” at the counter or run the risk of paying a lesser price and being held up and robbed at night safe.

This is now a “new charge” from our banks, a way of earning more from the very same customers that keep them in business. Why don’t CBTT look into this?  We, the public and small businesses and their customers, are struggling to make ends meet and all they do is find other ways to charge us for the basics of services.

Why doesn’t the CBTT look at the large massively successful insurers and ensure they are monitored more and pressured to pay claims quicker? Not to lowball their customers.

Why doesn’t CBTT use the increased fees they charge for licensing on industry to implement continuing professional development (CPD) classes at no charge?

Within the last three years, CBTT has imposed mandatory continuing or continuous professional development on brokers. Brokers must pay out of their pocket for their staff to take these courses from the Trinidad and Tobago Insurance Institute (TTII).

Each person in the brokerage firm dealing directly with clients and negotiating insurance contracts with insurance companies is required to do CPD courses from TTII at least 12 to 16 hours depending on the types of insurance business you do in your brokerage firm a year. It’s mandatory that brokers undertake this training yearly now, by being subjected to these courses.

The point I’m making is the regulator does not need to bash us over our heads with clubs and constantly tell us what to do. The policy makers need to slash regulatory barriers to help businesses and the people deal with the rising cost of doing business and not be on the side of hindering business.

They need to find solutions to allow the business to get done. As the old saying goes, business is business, so let’s see how we can find ways of making it happen.

Our businesses already have many increased costs imposed by the regulators since the changes made in the Insurance Act and both us and our customers are also struggling to make ends meet, so we need an understanding regulator, not a slave driver.

Neil Gosine is an insurance executive. He is also the treasurer of the UNC and a former chairman of the National Petroleum Marketing Company of Trinidad and Tobago. He holds a Doctorate in Business Administration, a Master’s in Business Administration MBA, BSC in Mathematics and a BA in Administrative Studies. The views and comments expressed in this column are not necessarily those of AZP News, a Division of Complete Image Limited.


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