New Trinidad & Tobago Insurance Rules Finally Implemented in 2021
New rules take effect a decade after they were proposed.
- June 2021
This is an excerpt from the Best's Commentary New Trinidad &Tobago Insurance Rules Finally Implemented in 2021. The entire report can be accessed at www.ambest.com.
With the proclamation by President Paula-Mae Weekes of Trinidad &Tobago, the Insurance (Amendment) Act of 2020 (which incorporates the Insurance Act of 2018) became law effective Jan. 1, 2021.
This legislation has been long in the making and undergone several revisions. The initial draft legislation, which emerged as far back as 2011, was extensively deliberated and subsequently amended. The 2020 Act's precursor, The Insurance Bill of 2016, was eventually passed unanimously by the Trinidad &Tobago House of Representatives on Feb. 16, 2018, and was sent to its Senate for debate and approval.
The Association of Trinidad and Tobago Insurance Companies (ATTIC) has endorsed the 2020 version, which aims to protect the interests of policyholders, strengthen corporate governance, raise the standards of professionalism within the industry, and improve accountability.
Key elements addressed by the 2020 Act include capitalization, corporate governance, internal controls and regulatory oversight.
The 2020 Act addresses the minimum capital requirements that insurance companies domiciled in Trinidad &Tobago must maintain. The required minimum stated capital for all companies is TT$15 million (US$2.2 million). Companies must also maintain a minimum regulatory capital ratio of 150%. This is a significant increase over previous requirements. Under the old regulations, life insurance companies carrying on long-term business were required to have share capital of TT$3 million, while insurance companies writing short-term insurance business (general insurers) were required to have capital of TT$1 million. The 2020 Act sets a five-year transition period for existing insurance companies to meet the required guidelines, which will moderate the impact of the increased capital requirements.
Corporate Governance and Internal Controls
Among a number of key provisions of the 2020 Act are guidelines to strengthen internal controls, risk and capital management, and corporate governance. Companies are now required to have an audit committee comprised of members of the board of directors. CEOs and CFOs must acknowledge the responsibility of the directors and officers of the company relative to preparing financial statements, maintaining adequate internal controls, and complying with legal and statutory requirements. The 2020 Act also requires the board of directors to establish formal policies and procedures to address related-party transactions. These stipulations of the 2020 Act aim to restrict excessive risk-taking and promote good governance and sound risk management practices by a company's board of directors and management.
Central Bank of Trinidad &Tobago (CBTT)
The 2020 Act grants much wider regulatory powers to the CBTT, which is charged with regulatory oversight of the Trinidad &Tobago insurance industry. Significant among these is the authority to address market conduct issues. The 2020 Act includes provisions for CBTT to revoke an insurer's registration depending upon the severity of the infraction. The CBTT may intervene in an insurer's operations when its capital ratio falls to 70% or lower. Furthermore, the 2020 Act institutes a comprehensive catalog of punitive fines and penalties for misconduct by insurance companies and their intermediaries.
According to the CBTT, the major enhancements to the insurance legislation will improve corporate governance for policyholder protection, stipulate stronger supervisory powers and tools for the Central Bank, provide greater safeguards for policyholders' funds, preserve the integrity and soundness of the financial sector, and improve standards of market conduct to ensure greater transparency in marketing and selling insurance products.
Despite the five-year transition period permitted under the 2020 Act for companies to address capital requirements and minimum regulatory capital ratios, some insurance stakeholders believe that the more stringent measures may stress the balance sheets and test the ability of some companies to enhance capitalization, which could ultimately see them become acquisition targets.
AM Best believes that the 2020 Act will not be impactful for rated Trinidad &Tobago-domiciled insurers. These companies maintain capitalization levels well in excess of the minimum threshold required under the 2020 Act, and have already implemented enterprise risk management programs that appropriately address corporate governance and internal controls.
Largest 30 Caribbean Insurers 2019 Ranked by Gross Premiums Written
||Country of Domicile
||Gross Premiums Written
||Capital & Surplus
||Manufacturers Life Reinsurance Ltd.
||IAT Reinsurance Co. Ltd.
||RGA Atlantic Reinsurance Co. Ltd.
||Royal Bank of Canada Insurance Co. Ltd.
||TD Reinsurance (Barbados) Inc.
||Guardian Holdings Ltd.
||Trinidad and Tobago
||Sagicor Life Inc.
||Global Indemnity Ltd.
||Greenlight Capital Re Ltd.
||Scotia Insurance (Barbados) Ltd.
||CIBC Reinsurance Co. Ltd. (1)
||BMO Reinsurance Ltd.
||Knight Insurance Co. Ltd.
||Raffles Insurance Ltd.
||Seguros Universal S.A.
||Atlas Financial Holdings Inc. (1)
||Energy Insurance Mutual Ltd.
||London Life and Casualty Reinsurance Corp.
||Best Meridian International Insurance Co. SPC
||Barents Re Reinsurance Co. Inc.
||Scotia Reinsurance Ltd.
||Humano Seguros S.A.
||Nagico Holdings Ltd.
||Ocean International Reinsurance Co. Ltd.
||Fortegra Indemnity Insurance Co. Ltd.
||Turks and Caicos
||Seguros Banreservas S.A.
||Massy United Insurance Ltd.
||Mapfre BHD Compania de Seguros S.A.
||INRECO International Reinsurance Co.
||Bahamas First Holdings Ltd.
(1) Data based on 2018. Data for 2019 not available at time of publishing.