FSC chief rejects IAJ criticism over insurance fee consultation

Financial Services Commission (FSC) executive director Lieutenant Colonel Keron Burrell has pushed back against the Insurance Association of Jamaica’s (IAJ) claim that insurers were not properly consulted before proposed fee increases reached Parliament.

Burrell, appearing at Thursday’s virtual meeting of the Senate’s Regulations Committee, said the regulator had been speaking with the sector for close to two years. He also challenged IAJ Executive Director Everton McFarlane, saying the fee review was not started under his watch but was among issues he inherited after McFarlane left the FSC.

The IAJ has argued that the industry was not meaningfully engaged and was not given enough detail to assess the proposed increases. Burrell rejected that position, telling senators that dialogue with insurers began long before the formal consultation window and has continued since.

“September 5, 2023, we would have consulted with the industry, and we got back comments after that. We gave them 30 days, but of course, we were unable to increase it. During that period, we consulted, and there was a meaningful dialogue and discussion, and that discussion continues up to today,” Burrell told the committee.

He said the talks were not limited to the planned fees. According to Burrell, industry representatives also raised matters such as insurance penetration, the approval of products and wider regulatory changes.

Burrell said objections about when the fees should be raised were not fresh concerns, as insurers had been discussing those issues with the FSC for years. He recalled that in 2023 questions were raised about whether the move should follow a hurricane season, but said the regulator also had to strengthen its capacity for catastrophe-related work.

“At the time, which was 2023, it was asked, ‘We just had a hurricane season why do you want it now? And I said, ‘The thing is we have a hurricane season every year; and secondly, I have to beef up as well as it concerns catastrophe in terms of the persons that have assessments, models, after catastrophe, after a big natural event; and what actually happens to the regulators’,” he expressed.

The level of consultation has become a central point of dispute in the debate over the fee package. McFarlane had publicly faulted the FSC’s communication with the insurance industry, but Burrell told senators the sector had not been caught off guard.

“We had a consultation period of 30 days, and that period, that consultation was pretty wide. It included the associations and the president and the executive and so on. Secondly, it included the institutions itself, and of course, we also sent it to the ministries and so on and so forth. We have met with and spoken to several members of the sector, more times than I can count, to include last week,” he said.

Burrell’s strongest response was directed at McFarlane personally. McFarlane now leads the IAJ, but previously headed the FSC before Burrell took charge. Burrell said that background made the criticism hard to accept because the fee review had already been in train.

“I said to Everton, ‘Everton, how could you have that in the paper? Recall you are the past head of the FSC. You passed this fire to me. This fee increase, I never started it. It was something you handed. If you’re talking about consultation, I think the best thing to do was to look in the mirror and ask yourself, why did I do this?’ I think there’s a 100 per cent consultation with the executive director of the IAJ,” Burrell said.

He further noted that some of the issues being raised by insurers fall into legislative and policy areas outside the FSC’s sole control, including work to update the laws and regulations for the insurance sector.

Even with the public disagreement, Burrell said discussions between the regulator and the industry have not broken down. “I think that the correspondence, the discussion, the consultations have been very fruitful, and I’m kind of understanding where they are,” he said.

The FSC is seeking Parliament’s approval for the first broad overhaul of insurance fees since 2008. The commission says its resources have not matched the pace of growth in the sector, where assets have moved from about $170 billion to more than $746 billion over that time.