The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government was yesterday told it must “accept the lion’s share of blame” if thousands of CLICO (Bahamas) policyholders lose their health insurance coverage, with its initial regulatory mishaps now compounded by repeated failed promises.

Paul Moss, an attorney who represents several CLICO (Bahamas) policyholders and creditors, told Tribune Business that these people now faced an even “more serious” situation after the insolvent insurer’s liquidator warned he would have to discontinue all medical insurance policies by New Year’s Eve.

Calling for the Christie administration to “act very swiftly” to prevent this, Mr Moss said he was pessimistic that it would heed the liquidator’s warning, given that there were barely seven weeks left.

This was despite the huge obligation the Government has towards CLICO (Bahamas) creditors and policyholders, due to the initial regulatory failings that failed to prevent the life and health underwriter’s collapse.

Mr Moss said both the Central Bank of the Bahamas and former Registrar of Insurance (now the Insurance Commission of the Bahamas) had failed to explain how CLICO (Bahamas) was seemingly able to move money out of this nation without the necessary exchange control approvals and other regulatory permits.

He added that these failings, together with the inability to deliver on numerous resolution promises despite encouraging policyholders to continue paying their premiums, meant the Government owed a huge duty to CLICO (Bahamas) victims to finally come through.

“The Government ought to act very swiftly,” Mr Moss told Tribune Business. “They have precedence now. When you deal with liquidators, they don’t necessarily have to comply with what you want them to do.”

That was a reference to the joint provisional liquidators’ recent decision to lay-off more than 2,000 Baha Mar employees, against the Government’s wishes.

Returning to the CLICO (Bahamas) situation, Mr Moss added: “They’d [the Government] better act swiftly, but I’m not at all optimistic.

“They say things for the moment, but have no intention of following through. It’s a sad situation for all. December is here in three weeks, and thousands of people could be affected.”

Mr Moss was speaking after Craig A. ‘Tony’ Gomez, the Baker Tilly Gomez accountant and partner, revealed in his latest liquidator’s report to the Supreme Court that excessive health claims payouts meant he would have no choice but to cancel all medical policies if CLICO (Bahamas) remaining assets were to be preserved.

Mr Gomez said the only possible salvation was for the Government to finally deliver on its long-promised resolution, which has been restructured from the original $30 million guarantee offered by the Ingraham administration.

That administration was the one that encouraged CLICO (Bahamas) policyholders to continue paying their policy premiums, on the basis that the entire portfolio would be transferred to a new underwriter - a move facilitated by the $30 million guarantee.

Yet neither the Ingraham nor Christie administration has delivered on the guarantee. The latter, though, in a series of meetings with policyholders and their attorneys up to June this year, offered a restructured plan.

The proposal being offered by the Government then was to pay all CLICO (Bahamas) former employees their due severance pay, and to effect the transfer of its remaining insurance policy portfolio to either a new underwriter or special purpose vehicle (SPV) that would be established to hold them.

All annuity holders with investments worth $10,000 or less would receive a cash pay-out in full, while those owed more than that would receive the first $10,000 in cash, then be paid the remainder via government promissory notes and bonds.

Nothing has happened since, and repeated Tribune Business e-mails yesterday to Michael Halkitis, minister of state for finance, and deputy financial secretary, Simon Wilson, seeking answers were not replied to.

“If they had followed through, if they really meant what they were saying, work on this would already have been in progress. You just don’t say it; you do it,” Mr Moss told Tribune Business.

“It takes time to set this up. It tells you they have bigger fish to fry, and are not concerned about all these people who have been languishing for almost seven years.

“The people suffer again. You can speak about the right thing, but at the end of the day people are left holding the bag.”

Mr Moss argued that the Government had a “tremendous responsibility” to do right by CLICO (Bahamas) policyholders and creditors given the regulatory oversight failings that marked the insurer’s slump into insolvency.

“One has to explain how it is that money was able to leave the jurisdiction without the knowledge of the Central Bank and the [Registrar] of Insurance,” he added. “No one has answered that question yet.

“There is culpability on them, and now the Government. The list goes on and on.”

Mr Moss said Bahamians looked to the Government and its regulators to protect their money and financial investments, yet it had failed in both this responsibility and making creditor and policyholders ‘whole’ again after the collapse.

“While there’s enough blame to go around, the Government has to accept the lion’s share of the blame,” he told Tribune Business.

“The people relied on the Government to provide regulatory oversight to ensure this doesn’t happen, and when it did happen, the Government seems impotent to do anything about it.”