Health Minister Gilbert McLean told members of the Legislative Assembly Thursday that the Cayman Islands National Insurance Company is serving one mighty purpose for the people of the Cayman Islands.
The Minister was speaking during Finance Committee on a proposed $3.35 million equity investment for the company to subsidise the operating loss relating to premiums for Seaman of $2 million and pensioners, $1.35 million ($3,355,428 in total) to be put on the Supplementary Appropriations Bill. This was voted in the House to stand part of the bill.
He said the company was offering a purpose by insuring all those people other insurance companies would not.
The Minister said he would be called a communist or socialist by other insurance companies for saying that the country is moving towards a position where it should be looking seriously at whether it can accommodate some six or so other companies charging top dollar, or pooling one pool of money to take care of the healthcare of all the people of the Cayman Islands. This view brought up at the Seafarer’s meeting Tuesday evening and was recommended by many at the meeting, he said.
The Minister commented that CINICO has only been in existence for a year, and although it is working well it does not have historic accurate data to allow it to predict costs for the various groups it insures.
Over $10 million had been saved to Government by it since its inception. Reasons for this include claims being deemed ineligible and utilisation and review of case management systems, he said.
George Town MLA Alden McLaughlin asked if the Minister could say what had caused losses of $3.35 million more than anticipated in May/June of last year or was the amount of projected loss underestimated.
CEO of CINICO, Mr. Ron Sulisz said that as new information is brought about the company is learning more. With regard to the pensioners there had been a large number of claims and that was not anticipated in terms of the volume. There were more seamen and veterans than had been initially estimated, he said. That’s what caused the need for extra funds.
Mr. McLaughlin asked what initial investment and subsequent equity investment had been put into CINICO.
Financial Secretary Kenneth Jefferson said the entity had to have capital injected it and as such Government put an initial $3 million into it.
Minister McLean added that $1 million equity was injected into also to cover anticipated losses, and this was included in the 2004/05 budget.
Mr. McLaughlin said that in adding the capital of $3m, the equity of $1m and the $3.35 million equity that was being proposed, that amounted to over $7 million being invested in CINICO over one year.
Minister McLean said that would be the case if the money proposed for the bill was approved, adding that CINICO, like every other insurance company, is ordered by the Cayman Islands Monetary Authority to have a certain amount of capital.
Mr. Sulisz said that the national insurance company has to maintain a certain net worth because it is licensed and regulated by CIMA.
Mr. Jefferson asked how CINICO would be aware of the volume of activity by its clients.
Mr. Sulisz said a database is being created by date of service and claims are being tracked by the month incurred. This would allow them to trend the activity and allow for better budgeting.
The Minister added that the tracking is based on professional actuary input.
Mr. McLaughlin asked if it was envisaged that CINICO would ever be self sustained.
Mr. Sulisz said his overall answer would be ‘Yes’. He said the purpose of the company was not to make a profit but to provide a service to the people of the Cayman Islands and by capturing data, as they are doing, they can determine what costs are for various groups, such as civil servants or pensioners.
When asked when it might become self-sufficient Mr. McLean answered that as it is a work in progress it would not be wise to try to say when.
Mr. McLaughlin said his concern is that if those people least likely to claim are not paying into the company then it’s not likely to become self-sufficient.
Education Minister Roy Bodden said there’s a danger of people looking at CINICO only in terms of breaking even or making a profit.
‘If there was no CINICO we’d be in a much larger deficit position than we’re in now – if Government had to take care of all these sick people.’