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Cedric Stephens | FSC must ensure execution of insurance reforms

Today’s article will examine interactions between a motorist and the insurance compensation system, as reported in last Sunday’s Observer.

My aim is to provide readers with information that helps them avoid the experiences of that motorist and to confront ignorance and misinformation. It should also empower them to navigate a byzantine claims process that many feel is stacked against them and is designed to benefit providers.

A second goal is to publicly encourage the regulator to take action to protect the interests of insurance consumers generally and to prevent them from being treated unfairly. It was most disappointing to learn that neither the newspaper, its columnist, nor the insurer, appeared to have recognised the scandalously poor treatment that was inflicted on an innocent victim of a car crash.

Motor insurance companies are regulated by the Financial Services Commission (FSC). This entity, since its inception over two decades ago, has been trying to craft claims settlement rules for the insurance industry. The process began with generic regulations that were decreed under sections 132 to 142 of the Insurance Regulations under the Insurance Act of 2001. They were followed 18 years later by market conduct rules that established specific standards conducting insurance business and how claims should be managed throughout their life cycles by insurers and intermediaries.

The 2019 rules did not result in any material improvements. They were a paper tiger and were replaced by a new set of rules on December 31, 2022 that are listed in The Jamaica Gazette under Part XIIA – Market Conduct (pages 2978 to 2996).

Surprisingly, the regulator, despite its past failures to bring about changes, appeared to have ignored the reach of ‘new media’ to disseminate information about its new rules. They relied exclusively on the gazetted rules which are obtained from the government printers at the cost of $1,400.

The insurer’s letter quoted in The Observer article clearly suggests that the management of the claim was not conducted in accordance with either the 2019 or 2022 rules. The persons who handled the claim are ignorant of Section 142O, Paragraph 2 [Page 2992] of the Insurance Regulations. It states that where a claim is made under a motor vehicle insurance policy “the insurer for the third party shall not decline to make payment of the claim (a) on the ground that the third party insured has not reported the motor vehicle accident giving rise to the claim; (b) on the ground that no report of the motor vehicle accident has been made to the police; or (c) any other ground that is inconsistent with the terms of the third-party insurance contract”.

The insurer reportedly wrote to Tell Claudienne in July or August that: “At present, the matter remains a no-report from our insured. Contact was made to obtain the report, and it was confirmed that she is aware of the accident and is making attempts to obtain full details from the driver at the time of loss. Our policy requires our customers to report all accidents and provide us with relevant documentation … we require proof of involvement to confirm that the incident occurred and to satisfy our policy conditions.

“At present, we are without the report and/or proof of involvement with relevant evidentiary support to determine if our policy conditions were met.”

Those statements were written two or three months ago. They are clearly in conflict with the FSC’s 2022 regulations, and The Motor Vehicles Insurance (Third-Party Risks) Act. Section 8(1) of the law states: “Any condition in a policy … given for the purposes of this Act, providing that no liability shall arise under the policy, or that any liability so arising shall cease, in the event of some specified thing being done or omitted to be done after the happening of the event giving rise to a claim under the policy shall be of no effect with such claims”.

The insurer appears to be unaware of the two statutory provisions. It is giving priority to the terms of its policy. This is wrong.

I do not need a law degree to conclude that the information in the insurer’s letter is incorrect. The motor insurance business was created by The Motor Vehicles Insurance (Third-Party Risks) Act 1941, as all motor insurance policies will confirm.

In ‘Spotlight on Insurance Claims Backlog’ I wrote on October 1 that, according to Section 6 of the FSC Act 2001, part of the regulator’s mission is to “promote the modernisation of financial services with a view to the adoption and maintenance of international standards of competence, efficiency, and competitiveness. Is the Financial Services Commission monitoring the performance of insurers individually and collectively in these areas on behalf of the public, given the standards outlined in Part XIIA of the December 2022 Insurance (Amendment) Regulations? If analyses of these sorts are not being routinely undertaken, how can we know that these companies are complying with the new rules?”

A claim for property damage of $173,500 should not take more than three months to settle. Four years after the introduction of the 2019 Market Conduct Guidelines and 10 months after Version 2.0 was gazetted is sufficient time for permanent and structural changes to have been made in how claims are managed.

There should be evidence of speedier settlements and improvements in the quality of service. This is not happening. The analysis in this column provides evidence that the FSC should ‘wheel and come again!’ The 2022 Insurance Market Conduct Regulations do not appear to be having any impact.


Cedric E. Stephens provides independent information and advice about the management of risks and insurance. For free information or counsel, write to: or

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