Financial Crime World

Challenges Facing Antigua and Barbuda’s Insurance Sector

Weak Corporate Governance Framework

A weak corporate governance framework can lead to a lack of diversification in ownership, putting pressure on the board and committees within an institution. To mitigate this, the Insurance Act (2007) limits shareholding by any individual or entity to 20% of the paid-up capital without prior approval from the regulatory authority.

Effective Board Oversight

  • Boards of directors must be knowledgeable about the institution’s business to make informed decisions and avoid conflicts of interest.
  • They must also set the tone and ensure a robust oversight framework exists within the institution.

Strengthen Legislation Supervision

The CARICOM Heads of Government meeting in Guyana in 2009 led to a new harmonized insurance act, which was passed in several sub-regional jurisdictions. However, according to a World Bank 2011 report, the Act needs further enhancements or an overhaul to meet today’s standards and best practices.

Training of Regulators

  • Regional insurance sector regulators must stay abreast with developments in the market, particularly in non-traditional products.
  • The ongoing technical support provided by the international community is a positive development in this regard.

Limit Political Level Influence and Encourage Transparency

History has shown that political pressure can affect financial crises. To prevent this, there is a need to shield financial sector regulators from political pressure.

MOU with Cross Border Regulators & Establishment of Regulatory Colleges

  • The use of a College of Supervisors will reduce regulatory duplication and inconsistency.
  • Improve bilateral dialogue between regulators.
  • Increase trust.
  • Enhance cooperation.

Conclusion

The paper highlights the importance of strengthening corporate governance frameworks, effective board oversight, improving legislation supervision, training regulators, limiting political influence, and encouraging transparency to mitigate the risks associated with the insurance sector in Antigua and Barbuda.