More regulations for Insurance companies
INSURANCE COMPANIES will soon be required to be more open about the policies being sold to clients. At the same time, the amended Insurance Act now places a requirement on insurance companies to publish quarterly reports.
The Senate on Friday passed a bill to amend the Insurance Act, which among other things, now requires insurance companies to explain the nature and effect of an average clause policy.
The average clause refers to clauses in policy requiring that, where assets are insured for less than their full value, the insured is required to bear a proportion of any loss.
Justice Minister Mark Golding, in piloting the bill through the Senate, stressed that "what this legislation is trying to do is to ensure proper disclosure to the consumers of the average clause provision and proper explanation as to how it works".
"It is a major step forward for consumer protection," he said.
"It enables persons who buy insurance to know what they are buying and how the average clause works, and why it is important for them to insure their properties for their full value if they want to get full indemnification," Golding added.
Gov't should protect consumers
Opposition Senator Marlene Malahoo Forte said that the average clause has "brought a lot of injustice for persons who buy insurance" and said that the Government should have done more in the law to protect the consumers.
Government Senator Lambert Brown said he too does not like the average clause but said that the requirement for newspaper publication and for details to be set out on the front page of the policy will go towards greater consumer protection.
Kavan Gayle, an opposition senator, said that the requirement in the bill for insurance companies to abide by risk-management principles, is a welcome addition to the landscape.
The Financial Services Commission is required to develop the guidelines, and Gayle said it is important that they are quickly put in place.
When signed into law, where a policy contains an average clause, this would be indicated clearly on the cover of the policy, otherwise the average clause will be void and of no legal effect.
An insurer who carries on property insurance in Jamaica or any other class of general insurance, is required to publish a notice in a daily newspaper quarterly explaining the nature and effect of an average clause. The insurance company is also required to put the notice on its website.