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THE INSURANCE ACT_ 2001 - MN Hamaty and Comapny Law Jamaican

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					                    THE INSURANCE ACT, 2001

           MADAM PRESIDENT, I RISE TO SUPPORT THE INSURANCE

ACT 2001, WHICH SET OUT A REGULATORY FRAMEWORK WHICH

SEEK TO PREVENT FINANCIAL PROBLEMS THAT OCCURRED IN THAT

SECTOR DURING THE 90'S.

           THE PEOPLE OF JAMAICA HAD TO INVEST BILLIONS OF

DOLLARS THROUGH FINSAC TO ASSIST SOME SIX INSURANCE

COMPANIES TO KEEP THEM AFLOAT. SOME OF THESE COMPANIES

RAN INTO TROUBLE, WHEN AMONG OTHER REASONS FAILED AS

THEY HAD ENGAGED IN NON CORE ACTIVITIES.

           THE NEW ACT IS DESIGNED TO HEAD OFF FINANCIAL

FAILURE OF FIRMS, CURB MARKET ABUSE, MISCONDUCT AND

MISMANAGEMENT, MAINTAINING MARKET CONFIDENCE IN THE

FINANCIAL SYSTEM, PROTECTING THE CONSUMER AND REDUCING

FINANCIAL CRIME.

           THIS BILL IS CONSUMER FOCUSED PROMOTING PUBLIC

UNDERSTANDING         OF    THE    FINANCIAL      SYSTEM.        CONSUMER

EDUCATION IS THEREFORE A KEY PART OF CONSUMER PROTECTION.


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                      SENATOR FRED HAMATY - WESTMORELAND                     1
                                                    THE INSURANCE ACT, 2001



TO ACHIEVE THIS, A PUBLIC EDUCATION PROGRAM WILL HAVE TO

BE INITIATED TO GIVE INDIVIDUALS THE KNOWLEDGE AND

UNDERSTANDING, AS WELL TO BE AS QUESTIONING AND INFORMED

CONSUMERS.       IN ADDITION FINANCIAL LITERACY MUST BECOME

PART OF THE EDUCATION SYSTEM PREPARING STUDENTS FOR

ADULT LIFE. FOCUSING ON RETAIL MASS MARKET FOR FINANCIAL

PRODUCT SUCH AS BANKING, INSURANCE AND PENSIONS.

           MADAM PRESIDENT, WHILE I APPLAUD THIS BILL, I

REALLY THINK THAT WHAT IS REQUIRED IN THE LONG TERM IS A

SINGLE REGULATOR OF THE FINANCIAL SERVICE INDUSTRY TO

CONSOLIDATE THE OTHER REGULATORY BODIES FOR BANKS,

BUILDING SOCIETIES ETC.          THAT BODY WOULD HAVE CRIMINAL

PROSECUTION POWERS, PUNISH THOSE WHO ENGAGE IN REGULATED

ACTIVITIES WITHOUT AUTHORIZATION, AS WELL AS: -

     (A)   WITHDRAW FIRMS AUTHORIZATION.

     (B)   DISCIPLINE FIRMS AND PEOPLE APPROVED BY THEM

           THROUGH         PUBLIC      STATEMENT        AND      FINANCIAL


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                      SENATOR FRED HAMATY - WESTMORELAND                     2
                                                    THE INSURANCE ACT, 2001



            PENALTIES.

     (C )   ENFORCE PENALTIES FOR MARKET ABUSE.

     (D)    SEEK INJUNCTIONS.

     (E)    REQUIRE THE RETURN OF MONEY TO COMPENSATE

            CONSUMERS.

            THEIR “REGULATORY TOOL KIT” WOULD BE BROAD FOR

EXAMPLE ON SITE VISITS, OR DISCIPLINARY ACTIONS AT THE WORK

PLACE, THUS, INTRODUCING A MORE “THEMATIC APPROACH” TO

REGULATION AND BRING ALL DIFFUSE REGIMES UNDER ONE ROOF

AND GET RID OF THIS ALPHABET SOUP OF REGULATORS AND

STATUTES TO ONE OF UNIQUE SIMPLICITY.                THE UK HAVE DONE

THIS WITH THE PASSING OF THE FINANCIAL SERVICES AND MARKET

ACT 2000 (FSMA), OTHER COUNTRIES ARE ALSO TAKING THE SINGLE

REGULATOR ROUTE. THE UK HAVE GONE FROM ONE OF THE MOST

COMPLEX REGULATORY STRUCTURES IN THE WORLD TO ONE OF

UNIQUE SIMPLICITY. ONE ACT OF PARLIAMENT, ONE REGULATOR,

ONE HAND BOOK OF RULES AND GUIDANCE, ONE CONTACT FOR


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                      SENATOR FRED HAMATY - WESTMORELAND                     3
                                                    THE INSURANCE ACT, 2001



EACH FIRM. THIS IS WHAT THE INDUSTRY AND THE CONSUMERS

SHOULD BE CALLING FOR IN THE LONG TERM.

           MADAM PRESIDENT, PASSING THE LAWS FOR GOOD

CORPORATE GOVERNANCE IS PRAISE WORTHY, BUT I ASK, DO

COMPANY DIRECTORS IN JAMAICA LACK OR HAVE SUFFICIENT

KNOWLEDGE IN THE FIELD OF COMPANY LAW, ARE THEY AWARE OF

THEIR PERSONAL LIABILITY TO SHAREHOLDERS AND CREDITORS?

DO THEY KNOW THAT NON-EXECUTIVE DIRECTORS OWE THE SAME

DUTY OF CARE TO SHAREHOLDERS AND CREDITORS AS EXECUTIVE

DIRECTORS AND DO THEY KNOW THAT A COMPANY CAN CONTINUE

TO TRADE IF IT IS INSOLVENT SO LONG AS IT HAS A REASONABLE

CHANCE OF SURVIVAL? IN ADDITION DO THEY HAVE DIRECTORS

AND OFFICERS LIABILITY INSURANCE. MADAM PRESIDENT, THERE

NEED TO BE GREATER EDUCATION AND AWARENESS OF LIABILITY

AMONG DIRECTORS, PARTICULAR IN THE CURRENT CLIMATE WITH

SO MANY COMPANIES WORRYING ABOUT INSOLVENCY. THE POINT

IS THAT SHOULD DIRECTORS PUT A FOOT WRONG WHEN A COMPANY


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                      SENATOR FRED HAMATY - WESTMORELAND                     4
                                                    THE INSURANCE ACT, 2001



IS INSOLVENT, CREDITORS CAN SUE THEM PERSONALLY TO TRY TO

GET BACK THEIR MONEY.

           THE OTHER AREA OF THE ACT THAT DIRECTORS WILL

HAVE TO PAY ATTENTION IS SECTION 147, SUBSECTION 4 WHICH

DEALS WITH SHADOW DIRECTORS. THIS PROVISION WILL ALLOW A

COMPANY LIQUIDATOR TO SEEK CONTRIBUTION FROM A “SHADOW

DIRECTOR” IF THE COMPANY GOES INTO INSOLVENT LIQUIDATION

AND PRIOR TO THE INSOLVENCY THE “SHADOW DIRECTOR” KNEW

OR     OUGHT    TO    HAVE     CONCLUDED        THAT    THERE     WAS     NO

REASONABLE PROSPECT THAT THE COMPANY WOULD AVOID GOING

INTO INSOLVENT LIQUIDATION. THIS SECTION IS ALL EMBRACING

AND WILL PLUG A LOOPHOLE WHERE PERSONS IN THE PAST LURKED

IN THE SHADOW, SHELTERING BEHIND OTHERS CLAIMING NOT TO BE

A DIRECTOR, WHILE GIVING DIRECTIONS TO A SUBSERVIENT BOARD.

           THE DISTINCTION BETWEEN A “SHADOW DIRECTOR” AND

AN “ADVISOR” IS A DIFFICULT ONE AND INDEED CASE LAW BEARS

THIS    OUT,    FOR    EXAMPLE       IT   WAS    CONSIDERED        THAT     A


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                      SENATOR FRED HAMATY - WESTMORELAND                     5
                                                    THE INSURANCE ACT, 2001



“MANAGEMENT CONSULTANT” MIGHT HAVE BEEN A SHADOW

DIRECTOR WHERE HE CARRIED OUT NEGOTIATIONS ON BEHALF OF

THE COMPANY WITH CREDITORS AND THE INLAND REVENUE, WAS

ALSO A SIGNATORY TO ITS BANK ACCOUNT AND ADVISED ON

TRANSFERRING THE WORK FORCE TO ANOTHER COMPANY THAT

WAS IN THE CASE OF RE TASBIAN.

           INTERESTINGLY, “BANKS” HAVE ALSO BEEN FOUND TO BE

SHADOW DIRECTORS. SOME JUDGES TAKE THE VIEW THAT BANKS

COULD BE “SHADOW DIRECTORS” IF THEY PUT PRESSURE ON THEIR

CLIENTS TO TAKE SPECIFIED ACTIONS. IN MORE RECENT CASES IT

SEEMS THAT A BANK WILL NOT BE A “SHADOW DIRECTOR” UNLESS

IT PUT ITSELF IN A POSITION TO MATERIALLY INFLUENCE WHAT THE

COMPANY DOES.          IT WOULD SEEM THE PRUDENT THING FOR

“BANKS” TO DO IS THAT WHERE A COMPANY GETS IN DIFFICULTY

THE BANK CAN PROVIDE CERTAIN CONDITIONS FOR FACILITIES TO

BE CONTINUED AND LEAVE THE COMPANY TO DECIDE WHETHER IT

WILL COMPLY WITH THESE CONDITIONS, IN THIS CIRCUMSTANCE


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                      SENATOR FRED HAMATY - WESTMORELAND                     6
                                                    THE INSURANCE ACT, 2001



THE BANK IS UNLIKELY TO BE SEEN AS A “SHADOW DIRECTOR.”

           MADAM PRESIDENT, FINANCIAL INSTITUTIONS IN THEIR

OWN RIGHT QUITE APART FROM LEGISLATION HAVE AN ETHICAL,

FINANCIAL, AND BUSINESS OBLIGATION TO THEIR SHAREHOLDERS,

DEPOSITORS       AND       OTHER    CUSTOMERS        TO    OPERATE      AND

EFFECTIVELY MANAGE THEIR INSTITUTIONS IN A PRUDENT AND

PROFESSIONAL MANNER TO AVOID THE TURBULENCE OF THE 90's.

IT WOULD SEEM TO ME PRUDENT TO WARD OFF SUCH OCCURRENCES

IN THE FUTURE, IT WILL BECOMES IMPERATIVE FOR THE PRIVATE

SECTOR,    THE    B.O.J.    AND    THE   GOVERNMENT         TO    ADOPT     A

COLLABORATIVE APPROACH IN ECONOMIC POLICY DIRECTION IF AS

A COUNTRY WE WISH TO GROW ON A CONSISTENT AND SUSTAINED

BASIS. THIS COUNTRY CANNOT TOLERATE A SITUATION WHERE

EACH PARTY IS ENQUIRING WHOSE SIDE OF THE BOAT IS

SINKING.

           MY ONE CONCERN WITH THE BILL MADAM PRESIDENT, IS

SECTION 115 SUBSECTION 2 (b) and SUBSECTION 3 OF THE ACT. I


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                      SENATOR FRED HAMATY - WESTMORELAND                     7
                                                    THE INSURANCE ACT, 2001



UNDERSTAND THE CONCEPT THAT BY LAW AND FOR THE

PROTECTION OF THE PUBLIC, BANKS, INSURANCE COMPANIES AND

INVESTMENT COMPANIES HAVE TO SURRENDER INACTIVE ACCOUNT

TO THE STATE.         WHERE I HAVE A DIFFICULTY IS THAT THE

TREASURY SHOULD SERVE AS CUSTODIAN OF THIS MONEY UNTIL

YOU CLAIM IT. THE TREASURY SHOULD NEVER TAKE OWNERSHIP

OF THE MONEY IF YOU CAN PROVE YOU ARE ENTITLED TO THE

MONEY.     I AM IN PRIVATE PRACTICE AND HANDLE ESTATES OF

DECEASED PERSONS AND EXECUTORS AND ATTORNEYS-AT-LAW

HAVE GREAT DIFFICULTY IN ENSURING THAT ESTATE’S ASSETS

HAVE     BEEN    FOUND      YOU    ARE     FACED     WITH     TREMENDOUS

FRUSTRATION INCLUDING HAVING TO WRITE TO EVERY BANK,

BUILDING SOCIETY, INSURANCE COMPANY, PENSION FUND, WHICH

HAVE EXISTED DURING THE LIFETIME OF THE DECEASED IN CASE BY

GOOD FORTUNE YOU STUMBLE ON UNDISCOVERED ASSET.

           WHAT      SHOULD       BE   INSTITUTED      BY   LAW     MADAM

PRESIDENT, IS A COMPULSORY “PUBLIC REGISTER” OF ALL


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                      SENATOR FRED HAMATY - WESTMORELAND                     8
                                                    THE INSURANCE ACT, 2001



UNCLAIMED ASSETS.          WE ARE IN THE INTERNET AGE AND FOR

THOSE WHO THINK IT IS IMPOSSIBLE TO KEEP SUCH A REGISTER LOG

ON   THE INTERNET SITE OF THE US “NATIONAL ASSOCIATION OF

UNCLAIMED PROPERTY ADMINISTRATORS” AT www.unclaimed.org

AND PREPARE TO BE PERSUADED.              UNCLAIMED ASSETS MUST BE

DECLARED AND PAID OVER TO THE STATE AS THIS BILL MANDATES,

BUT THEY MUST BE HELD FREELY AND IN PERPETUITY BY THE

STATE AND THEIR EXISTENCE PUBLICLY ADVERTISED BY LAW. HER

MAJESTY TREASURY IN THE UK IS CURRENTLY HOLDING BILLIONS

OF POUNDS IN UNCLAIMED FUND.

           I TRUST MADAM PRESIDENT, THAT THIS CAN BE DEALT

WITH IN THE REGULATIONS TO THE ACT AT SECTION 144 OF THE

BILL SUBSECTION (h) and (k) AND WOULD ASK LEADER OF

GOVERNMENT BUSINESS TO TAKE THIS CONCERN TO THE MINISTER

FOR POSSIBLE INCLUSION IN THE REGULATION, AS THIS WOULD

HARMONIZE AND BUTTRESS THE ACCESS OF INFORMATION ACT

WHICH IS NOW BEFORE THIS HOUSE.


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                      SENATOR FRED HAMATY - WESTMORELAND                     9
                                                        THE INSURANCE ACT, 2001



            MADAM PRESIDENT, FINALLY, TECHNOLOGY HAVE MADE

US IN A GLOBAL COMMUNITY IN A LITERAL SENSE OF THE WORD.

WHETHER WE ARE READY OR NOT.                   THE PRESENT FINANCIAL

INFRASTRUCTURE OF THE WORLD IS SO GEARED THAT MONEY AND

IDEAS CAN MOVE AROUND THIS PLANET IN MOMENTS.

            “MONEY CAPITAL” WILL GO WHERE IT IS WANTED AND

STAY    WHERE      IT    IS    WELL     TREATED,   IT     WILL   FLEE   FROM

MANIPULATION        OR        ONEROUS    REGULATORY         REGIMES     WHICH

ERODES ITS VALUE OR USE AND NO GOVERNMENT POWER CAN

RESTRAIN IT FOR LONG. WHILE I WELCOME THE BILL AND SUPPORT

IT FULLY.     THE COMMISSIONERS WHO HAVE OVERSIGHT OF THE

INDUSTRY MUST USE THEIR POWERS EVENLY AND EQUITABLY OVER

THOSE INSTITUTIONS THEY CONTROL AND GOVERN.

            MAY IT PLEASE YOU MADAM PRESIDENT.



       DATED THIS 7TH DAY OF DECEMBER, TWO THOUSAND AND

ONE.


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                      SENATOR FRED HAMATY - WESTMORELAND                    10
                                                               THE INSURANCE ACT, 2001




                                   .......................................................
                                   SENATOR F.C. HAMATY, Q.C.




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                      SENATOR FRED HAMATY - WESTMORELAND                    11

				
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