In T&T: Governor: Politics will not affect investor confidence

4 May 2012

Is there that much confidence to be diminshed anyway?

THE INDUSTRIAL relations climate and not the political climate will affect investor confidence in the country. So said Central Bank Governor, Ewart Williams yesterday morning in response to questions regarding the effect of recent rumours of discontent and parliamentary rearrangements in the People’s Partnership Government.

“Investors understand there is a political process. Sometimes it would not go as smoothly but in the final analysis it gets results. There is no doubt that we have a long-standing record of political stability so the political question is not what will affect investors,” said Williams.
At the moment, there are several outstanding negotiations as well as the Trinidad Cement Limited strike which is into its 68th day.
Williams said a Tripartite Commission is becoming more and more urgent. Therefore, a forum should be set for conflict resolution between the government, trade unions and the private sector as it was necessary to establish “a more harmonious” IR climate.
During his feature address at the Office of the Financial Services Ombudsman’s (OFSO) Ninth Annual Breakfast Meeting at the Central Bank Auditorium, Williams noted that motor vehicle claims presented the greatest challenge for the OFSO. In fact, in 2010, 235 complaints were made in the motor insurance category alone.
According to Williams, 2,000 insurance company complaints were handled by the Ombudsman between 2005 to 2011. Of the 2,000 complaints processed, two thirds were related to five out of 29 operating companies.
Most of the complaints involved unfair claims practices such as forcing legitimate claims to litigation, underpayment of claims and unreasonable delays of paying claims. Williams said these practices, in most cases, were the result of companies exploiting the antiquated insurance legislation by underpricing premiums although they do not have adequate claims reserves, in order to capture market share. As a result, when a consumer makes a claim, they cannot meet it financially.
“A few companies have developed formal dispute resolution mechanisms, but the majority of pend on informal, ad hoc arrangements,” said Williams.
Commercial banks however, did the opposite. According to Williams, in order to preempt a visit to the Ombudsman, banks established or strengthened formal internal dispute resolution mechanisms, which led banks to be more attentive to consumer complaints. So much so that between 2008 and 2011, the banks handled 2,000 complaints internally.
Williams said he believed the reason insurance company complaints are so high when compared to banks, resulted from more robust, up to date legislation and regulations covering local banks; the strong compliance culture resulting from decades of Central Bank supervision; and the lower capital and entry requirements faced by the insurance sector.


Comments are closed.