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CLICO defends sale of EFPA product


CLICO defends sale of EFPA product

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CLICO International Life Insurance Limited [CIL] yesterday said it operated above board with its Executive Flexible Premium Annuities [EFPAs] product, in the face of documented evidence that the Office of the Supervisor of Insurance was against the issuing of EFPAs to companies.
A memorandum sent on October 24, 2008, by then Deputy Supervisor of Insurance Vernese Brathwaite to the Permanent Secretary in the Ministry of Health sought to warn the Government department that the EFPA “is only to be issued to individuals”.
This was in response to a query from the permanent secretary about an invitation issued by CIL to the National Insurance Board to invest $20 million in an EFPA.
But speaking to the DAILY NATION from England yesterday, CIL president Geoffrey Brewster insisted that his company had not ignored a “cease and desist” order of 2006 by the former Supervisor of Insurance Carlos Belgrave to stop the sale of the financial product to companies, credit unions and institutions.
Brewster explained that Belgrave had indicated that CLICO could not sell an annuity to an organisation since the company’s initial application to the insurance supervisor “had one line for annuitant”.
 “[They said] it should be sold to an individual, which I acknowledged and they said to me that we needed to change the application form to separate the owner of the contract from the actual annuitant. We made those changes to the application and it was submitted to the Supervisor of Insurance,” Brewster said.
 He added that rather than have a product that catered to the individual customer and corporation at the same time, CIL took the decision to separate the services.
 “On December 12, 2007, I wrote the Supervisor of Insurance requesting approval for a product that could be sold exclusively to corporations with similar features as the EFPAs. In that letter I included the specimen contract, actuarial report and the application form and that was sent to the Supervisor of Insurance.
 “On February 11, 2008, the Supervisor of Insurance responded to me indicating that the application for an annuity, which we call an advanced performance policy, was approved,” Brewster said, noting that the move effectively separated the individual product from that offered to corporations.
 He said CIL took the approach that all EFPAs sold to a corporation would be transferred upon renewal to the category of an advanced performance policy.
 “There was always ongoing dialogue with the office of the Supervisor of Insurance,” Brewster stressed.
According to a report of the Oversight Committee headed by Permanent Secretary in the Ministry of Finance, William Layne, the Government was advised it should should only be responsible for individual EFPA investors.
The report said the state should not bail out out related parties of CL Financial or CLICO Holdings who had invested in the EFPAs since they knew what they were doing when they made their investments.