A bill tabled by the ruling National Democratic Congress (NDC) Government suffered a humiliating defeat in Parliament when the Opposition and Government backbenchers toppled the Bill during a vote.
The Insurance (Amendment) Act, 2012, provides for the imposition of a levy of 1% on the gross premium income,
net of premium funds, on insurance companies conducting general insurance business and associations of underwriters, the proceeds of which will be paid directly to the Grenada Authority for the Regulation of Financial Institution (GARFIN) being the regulator of financial institutions and providing that this payments are made within 21 days at the end of each month.
The second proposed amendment is to allow for companies conducting long-term insurance business to pay a deposit of $500,000.00 directly to GARFIN that will be held by the Authority in trust at 0% interest rate.
The Bill was presented by Finance Minister, Nazim Burke, who explained that there were extensive consultations with the insurance companies before the Bill was brought to parliament and that the Insurance companies understand the reason for it.
Burke say the Bill will ensure the financial regulatory framework is sound, that all financial agencies are regulated to prevent recurrences such as the collapsed First International Bank of Grenada, SGL, NALGICO, CLICO and BICO fiascos. He said to ensure sound financial regulation; GARFIN needs to have a stream of income, which is what this legislation will provide.
The finance minister said that the timing is good to implement the levy after holding out on it for the past four years. He said the money is not to give GARFIN profit but to ensure that if people were to lose their monies in these institutions they will not expect Government to take responsibility for their loss.
“What the government’s role is, is not to be there as a sugar daddy, for everybody. The government does not have the means itself, what the government is seeking to do is to collect sufficient resources and only sufficient resources to ensure that the system works well”, he said.
The finance minister’s explanation was insufficient to lobby support from the Opposition New National Party (NNP) members and Government Backbenchers, Karl Hood and Michael Church. Opposition Leader Dr Keith Mitchell raised serious objection with the amendment to the Bill on the basis that this financial demand on these companies will have a negative effect on their business and policyholders.
Mitchell said that the New National Party would not support any levy of any kind during this economic challenging period and suggested that GARFIN as was established by his administration should continue to receive Government’s subvention to undertake its work.
Government Backbencher, Karl Hood questioned what happens with the interests to be received on those monies to be held by GARFIN and was informed by the finance minister that the interest incurred on the monies from the insurance companies and the Association of Underwriters will create the stream of revenue for GARFIN. Burke said that Government does not have monies to hand over subventions to GARFIN.
A vote was called for on the bill which ended five in favour of the Bill, six against and four absent.