Cayman Islands Monetary Authority Chairman Tim Ridley said Wednesday he feared government would have to heavily subsidise CINICO – the government-owned insurance company – long into the future.
Speaking at an industry luncheon that was part of the Cayman Islands Insurance Association’s Insurance Week events, Mr. Ridley prefaced his remarks by saying they were his personal opinion, and not the official views of CIMA.
‘CINICO is a well-intentioned attempt to provide health cover for civil servants, indigents, children, seamen and veterans, the uninsurable and those older than 60 in a more efficient way than by Government simply writing the cheque in a disorganised manner,’ he said.
‘It is hard to conclude as yet that CINICO has helped control health costs for Government. Indeed, it could be argued CINICO has unnecessarily added an expensive layer of administration to what existed before and with no obvious benefit.’
Mr. Ridley did concede there was understandable resistance from long-time civil servants to any attempts to limit their full cover, particularly when they had contracted for specific benefits.
‘That’s just a fact of life.’
Mr. Ridley said he hoped over time CINICO could become a sustainable and efficient company and at least break even.
‘But my fear is that it is more likely to join the list of heavily subsidised government-owned companies for quite a long time in the future.’
Then speaking officially for CIMA, Mr. Ridley said the Authority has always unequivocally stated CINICO would be treated no differently from any other Class A health insurer.
‘The current recapitalization of CINICO is reflective of the Authority’s position.’
CINICO received a $9.2 million bailout from government in January to allow it to maintain its Class A licence, which requires a minimum positive net worth of CI$3 million.
Since its inception in early 2004 and through June 2007, CINICO had accumulated net losses of CI$18.1 million and had a negative net worth of CI$6.2 million.
Speaking personally on other health insurance matters, Mr. Ridley said his impression of the current health insurance position in the Cayman Islands was that it was ‘unsatisfactory, costly and inefficient.
‘It is unfortunately human nature to abuse a system that provides cover for routine medical and dental visits, and administration costs for employers and insurers are considerable. In my view, cover should be for serious treatment only. This could be achieved by higher deductibles and raising top limits.’
Mr. Ridley said restricting cover to more serious medical treatments might stop the upward drift of the cost of routine visits to the doctor or dentist. He said that since mandatory health insurance became law, the costs of doctor and dentist visits have gone up.
He also noted that healthcare costs for people with insurance are sometimes higher than people with no insurance.
‘There seems to be something of a conspiracy here and that does not bode well for the insurance industry,’ he said.
Another point raised in Mr. Ridley’s speech dealt with the insufficiency of the upper limits on most health insurance covers.
There have been many complaints about the inadequacy of the Standard Health Insurance Contract 1 in this regard because it only has a $25,000 maximum benefit for each episode of illness and a $100,000 maximum for medical fees during each calendar year.
Superintendent of Health Insurance Mervyn Connolly, who was in attendance at the luncheon, said afterwards the Health Insurance Commission board had made recommendation to the Ministry of Health and he hoped to see changes in the law regarding the SHIC 1 cover limits soon.
Mr. Ridley also called the lack of compliance by some small employers with regard to mandatory health insurance and pension plans very worrying.
‘I am unsure whether the full extent of non-compliance is known,’ he said. ‘I suspect it might be larger than we fear.’
Although he acknowledged enforcement resources were limited, Mr. Ridley said it was necessary to send a clear message to employers through successful prosecutions that defaulters would be pursued to the full extent of the law.
Mr. Connolly said the Health Insurance Commission is in the process of hiring another health insurance inspector and might even be recruiting more. He noted the HIC had successfully prosecuted several cases and that two more cases were scheduled for court later this month.
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