Christopher Ram demonstrates deeply flawed knowledge of insurance

Dear Editor,

In an article in Sunday Stabroek of Sunday March 1, 2009 entitled “Clico, Contagion, Containment and Concealment” Mr Christopher Ram makes sweeping charges against me and my ability and peddles incorrect information and analysis in relation to the issues surrounding Clico.

Please allow me to answer these grave charges.

Mr Ram asks how a company which issued insurance policies running into billions of dollars needed a statutory fund of only $50 million.  Mr Ram, who is one of Guyana’s most experienced accountants and an aspiring lawyer, does not understand the difference between a statutory fund and a statutory deposit.  The statutory fund as at 31st December 2007 is $9 billion, while the statutory deposit is $46.5 million.  Mr Ram here demonstrates a deeply flawed knowledge of insurance and a less than adequate knowledge of the Insurance Act.

Mr Ram accuses the President of contradicting what I said in my affidavit in support of the application to the court.  He said that President Jagdeo told the nation that it was the collapse of Clico Bahamas that triggered the action by me. He then accused me of saying in my affidavit that the problem stemmed from the business model and investment policies of the company.  Mr Ram either did not read my affidavit, or read it and did not pay any attention to what I said in it, or decided to deliberately misrepresent what I said. I averred in my affidavit that “Clico Bahamas… was made the subject of a winding up order;

“Clico Bahamas… does not have sufficient cash to meet surrender claims: of Clico Guyana;

“That in the event that the funds so invested are not returned as requested the Respondent would thereby be in breach of… the Act;

“That further to the foregoing the Respondent would be unable to meet its obligation.”  I therefore set out the full and complete story for the benefit of the court. For Mr Ram to imply that I did not rely on what had occurred to Clico Bahamas is gross dishonesty.

Mr Ram talks about investment products dressed up as insurance.  The Act includes a description of insurance products.  It is on this basis that insurance professionals have to determine whether a particular investment is permissible or illegal.  As an accounting professional and a business journalist, one would expect Mr Ram to know that insurance products do sometimes have significant investment elements.  One would similarly expect Mr Ram to know that the accounting profession, in recognition of this fact, has called for a clear separation of these two elements in the presentation of insurance accounts.

Mr Ram accused me of wrongly identifying the name of Clico in my petition to the court. The name I identified was “Clico Life and General Insurance Company (South America) Limited.”  I enclose a copy of the Resolution changing Colonial Life Insurance (Guyana) Limited to Clico Life and General Insurance Company (South America) Limited as well as the Certificate of Continuance showing the latter name. This is yet another example of Mr Ram writing from an uninformed position. Mr Ram might consider doing the right thing but I have no expectations.

Yours faithfully,
Maria van Beek
Commissioner of Insurance (Guyana)

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