Cedric Stephens Making sense of the greedy pastor and life insurance
Last Sunday Gleaner’s article about the ‘second coming’ of Kevin Smith – the late leader of Montego Bay’s Pathways International Kingdom Restoration Ministries – created a shroud around the short piece about the expected life insurance payout following the killing of a church member.
More column inches were devoted to the late pastor’s unlikely resurrection than to the losers in the plot, – the victim’s family members. Their losses will be in blood and money.
On the other hand, the late pastor’s family seems likely to get the funds. He was named as the policy beneficiary. None of this made sense to me.
My plan to use these articles as content for today’s column grew stronger after I read David Geddes’ letter to the editor. It was last Wednesday Gleaner’s letter of the day. He was replying to another reader’s question: What is the use of insurance? Mr Geddes is the director of stakeholder engagement, communication and international relations of the Financial Services Commission (FSC), which regulates non-bank financial institutions, including life and non-life insurance companies, and intermediaries.
Mr Geddes did not explain the motivation for his response. It is unclear whether criticisms were levelled at the insurance industry and its products, the FSC, or all three. The substance of the response suggests that the regulatory body bore the brunt of the implied criticism about the utility of insurance.
As I read Mr Geddes’s letter for the umpteenth time, I wondered why members of the $410-billion industry, its lobby, the Insurance Association of Jamaica, or their respective public relations agencies ignored a reasonable consumer question and allowed Mr Geddes to beat them to the punch.
Information about how the Taneka Gardner life insurance claim was handled influences public perceptions about insurance, insurers, their products, and the FSC. The Observer’s November 2 article, ‘Rich and Wily’, reflects the beliefs of some persons about insurance, insurance products, and the FSC. The following parts are germane to this discussion:
o Countless claims settlement delays and non-payment of claims led to the conclusion that the FSC does not regularly audit the claims process of local companies even though it investigates some consumer complaints.
o The requested information from the FSC about insurers’ claims settlement ratios, average settlement times, and other settlement data. Two officials there said that such information was not kept by the FSC. It would be better to seek that data from the insurers or the Insurance Association of Jamaica. (The 2020 IAJ annual statistical report does not include this data.)
o Insurance regulators in foreign jurisdictions keep settlement data information (and use it to inform minimum regulatory standards, develop standards, and make decisions about best practices).
o The Taneka Gardner claim was a prime example of the dysfunctions in the local claims process. Her throat was slashed in 2021. Following her killing, relatives complained of being left in the dark for over a year regarding the details of her life insurance policy, from which they are anticipating a pay-out.
o Other examples were cited to support the argument about excessive settlement delays.
None of the newspaper’s FSC informants or Mr Geddes referred to the existence of the regulator’s February 2019 insurance market conduct guidelines. They establish minimum rules on how claims should be managed and claimants are to be treated. Even though the regulator has kept a database of policyholder complaints since its inception 21 years ago, it still has no clue, for example, about how much time insurers are, on average, taking to pay motor claims.
The Financial Services Commission Act 2001 mandates the FSC, under Section 6(1), to promote stability and public confidence in the operations of the financial institutions that it regulates; public understanding of the prescribed institutions; and the modernisation of the financial services with a view to the adoption and maintenance of international standards of competence, efficiency, and competitiveness.
The collection, analysis, and monitoring of claims settlement data are consistent with the FSC’s mandate.
Ben Kingree’s and Louise Tanner’s 1994 article in the Tort & Insurance Law Journal, ‘Life insurance as a Motive for Murder’ – www.jstor.org/stable/25762461 – provided an explanation as to why the pastor’s family will not profit from Ms Gardner’s death:
Life insurance policies procured with the intent to murder the insured are void ab initio (from the beginning) if procured with the intent to kill the insured. The lack of insurable interest has been a common basis for voiding insurance policies. One has an insurable interest in his or her own life and may name anyone as a beneficiary. An individual who obtains insurance on another’s life must have insurable interest if the insurance is for his/her benefit. Otherwise, the insurance is considered void, speculative, or a wagering contract and is against public policy. The presence of insurable interest must be predicated on the continued interest in the life of the insured based on ‘blood or affinity’ or a reasonable expectation of sustaining loss from the insured’s death.
I do not have any details about the process in which the pastor was named as the beneficiary under Ms Gardner’s policy. Also, I am unsure whether the change in beneficiary complied with the provisions of the Insurance Act of 2001.
The absence of this information plus the fact that I am not an attorney precludes me from offering an opinion about whether Ms Gardner’s family should be paid the insurance proceeds.
Final words: I still do not understand why Guardian Life treated this matter of public interest as though it were a state secret. Was Kevin Smith the only rogue pastor preying on citizens? Ironically, the all-knowing ‘runkus’ clergyman did not know that the United Kingdom Parliament passed the Life Insurance Act of 1774.
The law requires policyholders (and by extension beneficiaries) to have an insurable interest in the life insured. As for questions about the ‘second coming’ of the late Mr Smith, the answer is above my pay grade!
Cedric E. Stephens provides independent information and advice about the management of risks and insurance. For free information or counsel, write to: aegis@flowja.com or business@gleanerjm.com