The Tribune

By NEIL HARTNELL Tribune Business Editor BAHAMIAN insurance brokers have "lost tonnes of business" to Scotiabank (Bahamas) group homeowners insurance programme, a former Bahamas Insurance Brokers Association (BIBA) president yesterday saying both parties needed to "get on the same page" and stick to their original agreement. Vaughn Culmer, head of Vaughn Culmer & Associates, told Tribune Business that clients placed by Scotiabank (Bahamas) into its group homeowners policy were potentially being placed "at a disadvantage", especially if their previous policies included home contents coverage, as the bank was only insuring the physical property. Expressing concern that independent brokers were losing "thousands and thousands of dollars in commission" payments to the Scotiabank group policy, Mr Culmer said he and fellow BIBA executives were seeking to meet with the bank to address all remaining concerns. Responding to comments by Scotiabank (Bahamas) managing director, Kevin Teslyk, who said he was "frustrated" that Mr Culmer and the brokers' organisation had not 'followed up' with him on any additional concerns, the former BIBA president said he had never met the bank chief. "I have never met with Mr Teslyk, have never talked to him on the phone, and do not even know what he looks like," Mr Culmer told Tribune Business. He added that the 'protocols' governing the group homeowners policy, and its relationship with Bahamian insurance brokers, had been thrashed out during an August 2010 meeting between BIBA and two Scotiabank (Bahamas) officials, then-managing director, Barry Malcolm, and Leah Davis. Stating that the agreed 'protocols' meant the relationship worked well "initially", Mr Culmer said it was agreed that whenever BIBA members experienced a problem, they could call Ms Davis, who would "put out a note to the Scotiabank branches to correct the problem and get it together". But, telling Tribune Business that BIBA's "complaints and challenges" started just before Mr Malcolm left Scotiabank (Bahamas), Mr Culmer alleged that the bank was "not honouring the existing relationship between the broker and the client". He explained that this meant Scotiabank (Bahamas) was not writing cheques to a mortgage client's existing broker, to cover the due insurance premium, if the client did not pay it. "They were supposed to do that as part of the agreement, and continue to honour the existing relationship," Mr Culmer said. However, a copy of the Scotiabank/BIBA 'protocol', sent to the latter's members on October 25, 2010, does not back Mr Culmer's assertion that Scotiabank (Bahamas) had agreed to pay outstanding insurance premiums to the client's existing broker. The 'protocol' merely states that if it does not receive proof the client has renewed homeowners coverage one day before it is due to expire, Scotiabank (Bahamas) will then place that client on to its group homeowners insurance plan. Indeed, the need for such a plan would seemingly have been eliminated if Scotiabank (Bahamas) had agreed to continue paying outstanding insurance premiums to the original broker. When challenged about this condition, and its absence from the 'protocol', Mr Culmer told Tribune Business: "It was verbally agreed upon in the meeting with Leah Davis, Barry, myself and Peter Cole. But we left that out of the protocol." He showed Tribune Business a September 21, 2010, e-mail to Ms Davis, in which he wrote: "Please also confirm per our discussion that the bank will also honour the client's request to have the bank make the premium payments on their behalf, and direct the payment to their broker/agent of choice should they request the same." "It was sincerely understood from the meeting that the practice of paying premiums to other brokers would continue," Mr Culmer told this newspaper yesterday. Recalling that meeting, the former BIBA president said Mr Malcolm confirmed the existing client/broker relationships would be "protected", while emphasising his concern that Scotiabank (Bahamas) estimated $1 billion mortgage portfolio was fully insured - especially against catastrophe perils. Mr Culmer said BIBA understood his concern, the two parties agreed their 'protocol', and: "We said we'll respect our end, you respect your end. We told our members that if you don't provide proof of renewal before the due date, don't come to me complaining, as you know what the protocols are." He added that, in his opinion, the agreement between Scotiabank and BIBA was "thrown out the window" when Mr Teslyk told Tribune Business late last year that the costs, time and administrative inconvenience associated with making payments to multiple brokers meant such a scheme was unworkable. Under the existing 'protocol', proof of homeowners insurance coverage is to be sent on time to Scotiabank (Bahamas) Retail Administration Unit, located at its Rawson Square head office in downtown Nassau. "Once that's done there should be no problems, but we're continuing to have problems. They're just saying that they never received the e-mail," Mr Culmer said. "Scotiabank has removed choice from the clients. Many of the clients do not know they're being put on the bank's group policy with J. S. Johnson." Mr Teslyk denied that mortgage clients were being denied their choice of insurance provider in an interview with Tribune Business on Monday, saying they retained such rights up until the coverage renewal date. But Mr Culmer, saying that several brokers had complained individually about the issue to industry regulators, said: "We have sat in meetings, particularly at the Insurance Advisory Council level, and advised them that problems are still occurring... They were very concerned, and were discussing with them the whole banking issue. "The fact is that the brokers have lost tonnes of business, thousands and thousands of dollars in commission. The other problem is that they're not renewing the full gamut of the client's insurance." Mr Culmer said it was unclear whether Scotiabank (Bahamas) group homeowners policy was covering the subject property's full replacement value, or just the sum left under the mortgage. One element not being covered, he added, was the home's contents. "If the client had contents coverage, it's not being honoured," the former BIBA president said. "They're only doing the building coverage. It's very concerning. One is the loss of business, and second, the client is at a disadvantage." Mr Culmer said that on BIBA's behalf, he was seeking to arrange a meeting between Mr Teslyk and himself, current president Tanya Woodside and Mr Cole, to resolve all outstanding problems. "We'd like to sit down with Mr Teslyk and bring these concerns to him, and enlighten him on the technical issues side of the matter. All we have to do is get back to the agreement. If we follow that agreement, Scotiabank's interests will be covered, and so will ours. "We'd like to know why the original agreement was discontinued, and can probably allay his concerns. We just need to be on the same page. I called his office, and am waiting to hear from him."