The Life Underwriters Association of Cayman highlighted ethics in the insurance market at its monthly luncheon meeting last week by welcoming guest speaker Morag Nicol, the head of insurance at the Cayman Islands Monetary Authority.
Mrs. Nicol was pleased to note LUAC included two statements concerning ethics in its Association Pledge, which members recite at the beginning of every meeting.
‘I am pleased to have been invited to this luncheon today as I regard this as yet another positive step in the ongoing developing relationship between CIMA & LUAC,’ she said. ‘Whilst in many other countries it would be most unusual, and often unheard of, for such a meeting between the regulator and the industry, it is CIMA’s position that there is great value in endeavouring to maintain strong working relationships with its licensees, fostering improved relations through a variety of forums including events such as this luncheon today.’
CIMA statistics show that as of the end of December 2006, the net premiums of Cayman’s life insurance market stood at CI$18.5 million, more than 10 per cent of Cayman’s total domestic market of CI$155.
‘There has been a constant increase in the size of [the life insurance market] over the last 10 years,’ Mrs. Nicol said.
Through 30 June 2007, Cayman had 28 Class A insurers; 752 Class B insurers; 25 insurance managers; 29 insurance brokers; and 89 insurance agents, Mrs. Nicol said.
‘There has been a significant increase in the number of agents over the last 12 to 18 months, reflecting an increased interest in the area of life insurance.’
Although there is no legislation governing ethical behaviour in the insurance industry, CIMA issued a revised Statement of Guidance on Market Conduct for Class A Insurers and Agents a year ago.
‘The point is made that having standards of business conduct is intended to strengthen consumer confidence,’ Mrs. Nicol said. ‘This underscores the principle that ethical behavior is not only good in and of itself, but it is necessary for sound business practice and development.
Mrs. Nicol explained why ethical behavior was not only good for agents and businesses, but the industry on the whole.
‘Clearly, if consumers have a substantial level of confidence that the market in which they are participating, and the service providers who are providing the product are maintaining a high level of recognised ethical behavior, this will have a positive impact on consumer expectations, confidence and long term loyalty and stability.
Furthermore, having confident consumers tends to result in an expansion of the market as more people are drawn in.’
CIMA’s Statement of Guidance makes reference to the requirement for people in the insurance industry to act with integrity, care, skill and diligence in their business activities, Mrs. Nicol said. It also advises agents to pay due regard to the information needs of customers and to be as transparent as possible, to avoid conflicts of interest and to have a published complaints procedure.
‘The concern for ethical business practices is also, I’m sure, a core concern of LUAC – if it were not so then I would not have been invited to speak here today,’ Mrs. Nicol said.
‘I would encourage LUAC to continue to look forward and be proactive in responding to the new challenges and changes that are inevitably around the corner in this fast-paced business sector in which we operate.’