– in bid to make life less complicated for beneficiaries

THE National Assembly on Thursday night unanimously passed amendments to the Insurance (Amendment) Bill 2018, Bill No.3 of 2018 which now amends the Insurance Act 2016.

The insertion of Parts XX, XXI and XXII address the areas of contracts for long-term business, protection of policies, and paid-up policies, surrender values and non-forfeiture.
Part XX, according to the explanatory memorandum, provides for various areas related to contracts for long-term insurance business. It provides that an insurer shall not enter into a contract for the purpose of long-term insurance business unless, at the time the contract is entered into or not later than seven days after the contract is entered into, the insurer serves on the other party to the contract a notice specifying the nature and type of policy, and annexes a form of notice of cancellation for use by the other party to the contract.
The Bill makes it an offence for an insurer to contravene this provision, however, this contravention does not invalidate the contract. In addition, the Bill provides for the manner in which a person may serve a notice of cancellation on the insurer.
Part XX also provides that an insurer shall not issue any policy under Type A of Schedule 2 to the Act, unless the rate of premium chargeable under the policy is approved by its actuary. Clauses 266-268 of Part XX provide for matters related to proof of age in respect of policies, including the procedure to be adhered to should a company decline proof of age tendered in respect of a policy and also the effects of a mis-statement of age and non-avoidance of a policy due to such mis-statement.

NAMED BENEFICIARIES
Additionally, Clauses 270-279 of Part XX provide for issues related to the beneficiaries. These provisions allow a named beneficiary to enforce payment of a life policy effected for his benefit. The Bill makes provision for the irrevocable designation of beneficiaries, and provides that an irrevocable designation may only be made in favour of a child, spouse or common-law spouse. The designation can be changed only if the named beneficiary dies or, in the case of a spouse, if the marriage comes to an end. The Bill further provides that a designation of a beneficiary by a will does not affect a designation made under the policy.
Meanwhile, Part XXI seeks to provide for the protection of policies, in particular the application of policies to debts. The Bill provides that the property and interest, of any person in a policy effected upon his own life, is not liable to be applied or made available in payment of his debts by any process of any court. It also provides that a pro rata condition of average in an insurance contract is of no effect, unless the insurer informs the policy-holder of the nature and effect of the condition before the contract is entered into, or before the policy-holder can cancel the policy without penalty.
Finally, Part XXII provides for paid-up policies, surrender values and non-forfeiture. Clause 283 of Part XXII provides for the circumstances under which a policy-holder, who desires to discontinue further premium payments on a policy, is entitled to a paid-up policy and the manner in which the policy shall become payable.
The provisions of the aforementioned parts were already in the law and are being re-inserted into the Act.

VERY COMPREHENSIVE

Opening the debate on the Bill, Finance Minister Winston Jordan said the Bill serves to amend the very comprehensive insurance legislation that was promulgated in 2016. The 2016 Act provided a consolidated legal framework for the supervision of insurance. It gave effect to the important government policy objectives by enhancing the regulatory framework, the financial soundness of insurance and protection of policy holders through a new solvency assessment and management regime, and it introduced an introductory framework for insurance supervision- it is aligned with the national standards for best practices custom-made to emerging Guyanese circumstances in the post-CLICO period.
The Act drafted a framework legislation contains a fundamental policy or underlying principles that are unlikely to remain unchanged in the future. It addresses the basic and minimum issues and confers powers necessary to regulate insurance and delegate the power to make subsidiary legislation to the Ministry of Finance.
“This Bill seeks to amend the aforementioned Act, and is supportive of the protection of a beneficiary’s life insurance; it was inadvertently omitted from the substantive legislation, because it was intended that the provisions would have been incorporated as regulations to be incorporated under the authority of the said Act,” Minister Jordan said.
“However, based on technical advice on grounds that because the issue had not been adequately addressed in the body of the previous substantive legislation, it could not be enclosed in the regulations. There is therefore now need for it to be included by amendment to the substantive legislation,” he told the House.

A TIMELY INTERVENTION
Opposition Member of Parliament, Anil Nandlall, who was the first speaker on the opposition side of the House, supported the Bill. He said he is pleased that efforts are being made to correct a lacuna which exists in the statutory structure. He, like Jordan, outlined the history of insurance legislation.

He said the omission of the three parts created “unfortunate deficiencies”, while “putting husbands and wives as beneficiaries of an insurance policy in a precarious position”.
“This is a timely intervention,” said Nandlall, who called on Minister Jordan to state why the 2016 Act was never enforced, given that it was assented to by President David Granger in July 2016.

“That is something we ought to avoid as legislators; we have to cease this practice. There must be very good reason for us as a collective delegating our collective power to a member of the executive to bring into being… If it has to be done in special circumstances, then we have to ensure it is brought into operation with every convenient speed,” Nandlall added.

Meanwhile, opposition member Irfaan Ali asked whether any attempt will be made by the Ministry of Finance to develop an education programme or have an outreach to educate persons about the Bill, especially the amendments.
In response, the Finance Minister reiterated that the amendments were inadvertently omitted from the Act. He however reminded his colleagues that to err is human.
“There was no attempt to pass the legislation and not enact it. The reality is the regulations to the Bill had to be drafted and completed, and these were very extensive and complex regulations and they took quite a while to be drafted. As you are aware we had to ensure highest degree of accuracy- and consultations with stakeholders,” said Jordan.