The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government has been accused of “letting down its people” by failing to follow through on repeated pledges to resolve the CLICO (Bahamas) collapse, which now threatens to leave hundreds of Bahamians without medical insurance cover.

K P Turnquest, the FNM’s deputy leader, told Tribune Business that the Government had a special obligation towards CLICO (Bahamas) policyholders given that a “regulatory breakdown” had contributed significantly to the insurer’s insolvency.

Speaking in a recent interview, he said the potential cancellation of all CLICO (Bahamas) health insurance polices in just over one month’s time was a “natural consequence” of the Christie administration’s failure to deliver on an amended guarantee.

“It’s unfortunate that the liquidator has come to this position, but I suppose we all know there are consequences that flow from the inaction or inability of the Government to follow through on its commitment to the Bahamian policyholders,” Mr Turnquest told Tribune Business.

“That is an unfortunate situation, because now it puts the policyholders in a particularly difficult position as many of them may have pre-existing conditions that do not allow them to purchase insurance elsewhere.

“That’s not fair to them as they’re stuck in some kind of limbo as a result of this whole scenario. It’s another case where the Government of the Bahamas has let down the people by not following through.”

Craig A. ‘Tony’ Gomez, the Baker Tilly Gomez accountant and partner, warned in his last liquidator’s report to the Supreme Court he had no choice but to cancel all health insurance policies unless the Government delivers on its resolution promises by New Year’s Eve.

He warned in his latest Supreme Court report that it was simply unsustainable to maintain the insolvent insurer’s health policies because payouts exceeded annual premium income.

This, Mr Gomez explained, was steadily eroding the $11.607 million that CLICO (Bahamas) held in its bank accounts at year-end 2014, thereby undermining his court-ordered mandate to preserve the insurer’s assets for the benefits of creditors.

He added that Value-Added Tax (VAT), which levies 7.5 per cent on all health insurance premiums, had further contributed to the cancellation decision, as the liquidator/CLICO’s estate were having to absorb the tax payments.

As a result, Mr Gomez warned: “The liquidation can no longer continue to provide insurance coverage for the medical policyholders, and we have made a decision to discontinue all medical policies.

“Our expected date for cancellation of all medical policies will be December 31, 2015.”

The former Ingraham administration initially proposed a $30 million guarantee to cover the anticipated shortfall from CLICO (Bahamas) liquidation - a move viewed as essential to facilitating its remaining policy portfolio’s transfer to another underwriter.

However, the Christie administration has altered this. At a June 2015 meeting with policyholders and their attorneys, the Government promised to pay out annuity holders with annuities worth $10,000 or less.

For those holding annuities worth $10,000 or more, they were to get $10,000 up front and be paid the rest in Government bonds with a seven-year maturity term.

Former CLICO (Bahamas) employees were also to be paid the severance due to them, while insurance policyholders would be transferred either to a new entity or special purpose vehicle (SPV) created by the Government.

Mr Turnquest told Tribune Business that given the Government’s promises, it was “unbelievable” that it would spend money on numerous other projects but not fulfill the guarantee’s terms “to make these people whole”.

Suggesting that the Government had a special obligation to CLICO (Bahamas) policyholders, Mr Turnquest told Tribune Business: “What has happened to cause this failure in the first place is a failure or breach in the system of oversight in this particular entity.

“You would think the Government would try to do it’s part to resolve this situation and make these people whole.”

Mr Turnquest revealed in the House of Assembly recently how a widow was unable to access the life insurance benefits left by her deceased husband, a CLICO (Bahamas) policyholder, and now faced losing her home because she was unable to meet the mortgage it would have covered.

“That’s a real consequence of the Government’s inaction and lack of concern,” the FNM deputy leader told Tribune Business.

“I think we would all have to admit that there was some breakdown in regulatory oversight of this company, just based upon the information made available in the press. You can draw your own conclusions from there.”

Mr Gomez’s latest Supreme Court report illustrates the significant fall-out the impending discontinuation of all CLICO (Bahamas) health insurance policies will cause.

For he paid out a total $719,826 to cover some 961 policyholder claims in just six months between June 1 and December 31, 2014. Those persons’ access to potentially life-saving medicines and care may now be jeopardised unless the Government delivers.

Explaining that he has little choice but to take this course of action, Mr Gomez warned in his Supreme Court report: “As of the date of this report, CLICO (Bahamas) had $11.607 million in its bank accounts, which is a major concern in the liquidation.

“Professional fees, medical and death claims, coupled with the staff and building expenses, have to be paid on a regular basis (daily and monthly). There is a depletion of the available funds as a result of the payment of the aforementioned expenses.

“For the six-month period covered by this report alone, medical claims alone amounted to $719,826. For the year, medical claims of $1.142 million represented 96 per cent of the medical premiums collected.”