1. Leon Anderson Senior Director of Insurance Financial Services Commission, Jamaica September 21-22, 2006 FINANCIAL SERVICES COMMISSION CAIR ANNUAL CONFERENCE 2006

2. INTERVENTION & ENFORCEMENT THE JAMAICAN EXPERIENCE Agenda The Legislation Trigger for intervention Enforcement procedure Impact on the industry Impact on policyholders Post Mortem Lessons learnt –Upgrade regulatory framework –Rehabilitate the industry –Establish new regulatory body - FSC

3. INTERVENTION & ENFORCEMENT THE JAMAICAN EXPERIENCE Major Legislative Provisions The power to regulate and intervene Legislative enforcement actions: –Prosecution –Restrict scope of business –Impose limitations on a number of activities, e.g. acceptance of new business –Prohibit the company from soliciting new business or entering into other transaction or class of transaction –Removal of director or manager –Assume temporary management –Suspend or cancel registration –Petition the court for winding up order to liquidate the company

4. INTERVENTION & ENFORCEMENT THE JAMAICAN EXPERIENCE Trigger for Intervention Breach of the legislation Failure to comply with an order Failure to comply with directions Fit and Proper concerns Pending insolvency

5. INTERVENTION & ENFORCEMENT THE JAMAICAN EXPERIENCE Enforcement Procedure Opportunity to be heard given to directors & managers Directors’ undertaking to take corrective actions Directions Cease and desist order Prosecution Suspension/cancellation of registration Temporary Management Liquidation

6. INTERVENTION & ENFORCEMENT THE JAMAICAN EXPERIENCE Impact on the Industry The collapse in the 1990’s refocused the industry into accepting the need for regulation The collapse of Dyoll was not as a result of poor management - catastrophe Increased appreciation of reinsurance models and contents of treaties Heightened appreciation for strong capital Merger talks or rumours of talks Review of business operations by companies

7. INTERVENTION & ENFORCEMENT THE JAMAICAN EXPERIENCE Impact on Policyholders THE DYOLL EXPERIENCE Shaken confidence in insurance Policyholder ignorance of the facts due to lack of information No fall out – policyholders were protected

8. INTERVENTION & ENFORCEMENT THE JAMAICAN EXPERIENCE Post Mortem Could the regulator have intervened earlier? The secrecy provisions of the FSC Act prevented the regulator from commenting publicly on rumours that the company was insolvent What about disclosures to the Stock Exchange? – conflict of interest on the part of the regulator. Inexperience in dealing with cross border insolvency and temporary management and liquidation Expose the need for improved knowledge of reinsurance regulation The increase in regulatory resources was acknowledged

9. INTERVENTION & ENFORCEMENT THE JAMAICAN EXPERIENCE Lessons Learnt Be more proactive; seek information aggressively The need for improved reinsurance regulation The need for proper documentation and written communication Improve Public information

10. THANK YOU For Your Attention & Participation