A RECENT ruling of the Jamaican Supreme Court and a misguided act of the Financial Services Commission (FSC) on the eve of Dyoll Insurance Company Limited's closure have made nonsense of the contractual commitment made to many of the Dyoll policyholders.
The court ruled, agreeing with a position taken by the FSC, that only if a policy was physically written by Dyoll in Jamaica could a policyholder benefit from the prescribed deposit held by the Financial Services Commission for Dyoll's policyholders. Dyoll policyholders who took out their policies in Cayman would not receive a payment from the prescribed deposit, nor would they be recognised as policyholders by the Financial Services Commission.
The actions of the FSC, compounded by the decision of the court to sanction such action, is aggravated by the fact that on the eve of Dyoll's collapse, the FSC ordered Dyoll to hand over $1 billion dollars as a 'designated deposit'. This was no doubt intended by the FSC to be applied in such a manner so as to exclude non-Jamaican policyholders from benefiting from the prescribed deposit.
Will the FSC be allowed to do this? Will there be no further appeal to the decision of the court and of the action of the FSC? Who will be championing the cause of non-Jamaican policyholders who made applications to Dyoll through its overseas agent in Cayman?
Further, the action of the FSC, while probably in accordance with law, is destructive to the local general insurance industry.
An illustration of the same principle that gives legal preference to the claims of nationals above those of the general policyholder highlights the dangers.
Suppose a Jamaican takes out, say, medical insurance with a United States insurer, the company falters, the state in which the insurer resides suddenly and retroactively seizes company assets and declares that these will be used to satisfy claims from American policyholders in preference to others. As a result the Jamaican will get a lower proportional settlement of his claim than an American policyholder.
At the time the policy was taken out both parties would have believed they enjoyed comparable security. It is natural that the non-United States policyholders would feel that they have been the victims of sleight of hand or state-supported fraud. The outcome is inequitable.
If the practice followed by the FSC continues to be supported by the court then it will lead to the decline of overseas insurance coverage by Jamaican companies. How could any overseas policyholder feel confident in the strength of a Jamaican insurer if, under circumstances beyond the policyholder's control and without any prior warning, the underlining net worth of the insurer is used in a manner prejudicial to his interests?
The expansion of services forms a large part of Jamaica's future. This cannot occur with unbalanced and retroactive preference being given to one class of policyholder. We are surprised that the general insurance industry has not been more vocal in this matter.
The FSC should seek to settle this matter and should do so in a manner that gives equal protection to all insured regardless of where the policy was written. To act otherwise is unjust and will undermine the efforts of Jamaican insurers to expand abroad.
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