Government’s decision to pay full health insurance premiums to CINICO has resulted in the need for additional funds for the budget years 2018 and 2019.
Government presented two supplementary appropriation bills in the Legislative Assembly on Monday, outlining the various exceptional-circumstance transactions, approved by Cabinet, that resulted in higher costs.
Finance Minister Roy McTaggart said, “For a number of years, government has underpaid actuarial premium rates for civil servants, civil servant pensioners, seafarers and veterans.”
This practice of premium discounting contributed to issues for CINICO, including large operational losses and CINICO falling below the prescribed capital requirement mandated by insurance regulator, the Cayman Islands Monetary Authority, he added.
From 2019, government committed to paying the full actuarial premium rates, which cost the government an additional $14.4 million in that year alone. An initial $5.6 million was approved by the Legislative Assembly and placed in the appropriation law for the 2019 financial year, and the further $8.8 million was approved by finance committee in 2019.
The additional funding for health insurance premiums was placed within the budget of the Ministry of Finance and then reallocated to the various ministries and portfolios.
Deputy Governor Franz Manderson noted healthcare costs for retired civil servants fell $4.9 million short of the actuarial cost of $27.4 million in 2019. This was caused by both a net increase in the number of former civil servant pensioners and higher premiums. The highest paid monthly healthcare premium for a retired civil servant jumped from $958 in 2018 to $1,288 in 2019, an increase of 34%, Manderson said.
Other exceptional circumstances included, for instance, $1.32 million needed for the Election Office’s verification of signatures, the maintenance of the electoral register and preparation for the referendum on the proposed cruise berthing facility.
In the judiciary, personnel costs were also higher than budgeted. This resulted from a new full-time position for a judge in the Grand Court’s Financial Services Division, a retroactive increase of the salaries and benefits of magistrates and the normalisation of salaries between Grand Court and Court of Appeal judges. In addition, the number of magistrates was increased and demand for visiting overseas judges was larger than budgeted, Attorney General Samuel Bulgin said in a statement.
The supplementary appropriations will be debated in the Legislative Assembly’s Finance Committee following the second reading of the Domestic Partnership Bill.