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The Way Forward

Following the diagnostic review revealing the impact of the interest-sensitive products, a government policy decision was taken to refocus the industry on its core business and away from quasi-insurance products and non-insurance business which contributed to the liquidity problems and mitigated against viability in the industry.

The initial strategy was to restructure and merge the portfolios of the failed companies under a new company - Independent Life - followed by divestment. However, the divestment goal of the intervention was accelerated by a subsequent decision to sell the insurance portfolios through a tender process, rather than forming and operating a new company with its resulting expenses.

Importantly, the problematic lump-sum, interest-sensitive policies would be removed from the portfolios of the three companies, thus making the remaining business more attractive to potential buyers.

The perceptiveness of this strategy is borne out by the fact that eight companies from Jamaica and the wider Caribbean entered the bidding process for the remaining portfolios on the invitation of FINSAC.

Traditional, equity-linked, group health, group life and savings-type policies as well as pension schemes are poised to become part of one or more successful businesses after the tender process is completed.

Policyholders funds will be secured and the now viable portfolios will enhance the business of the successful bidder or bidders.

What will emerge from the rehabilitation and divestment strategy is a stronger and more profitable insurance industry. Over 200,000 policyholders with insurance coverage of over $91 billion will have been protected under current efforts to resolve the problems of Mutual Life, Crown Eagle and Dyoll Life. The insurance sector will also be well-placed to meet the needs of its customers and face the challenges of the future.

 

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