There was a teleconference hearing of the Caribbean Court of Justice today in which 54 Belizeans are appealing the decision of the Court of Appeal. They say that the Government of Belize did not adequately regulate the life insurance company which they bought insurance policies from. So, when that company closed down in Belize, they lost 4 million dollars collectively in insurance coverage. They want the court to order the Government to cover that amount.
At its heart, this is a case about consumer protection, and a group of policy holders who say that the Government should have stopped this insurance company from carrying on business in an irresponsible manner. That type of business practice, they say, has caused them to suffer losses they weren't supposed to.
It dates back to the closure and liquidation of the Colonial Life Insurance Company, CLICO, which was headquartered in Trinidad and Tobago. CLICO expanded into other parts of the Caribbean, including Belize, Barbados and the Bahamas. But its bubble burst in 2009 - and the company folded leaving thousands in the lurch.
In March of 2010, the Supreme Court ordered the liquidation of the assets belonging to CLICO, so that their creditors could be paid off. That was done, but there was not enough money to pay the customers of CLICO in Belize who bought these insurance policies from them.
54 of the former customers of CLICO then came together to file a lawsuit against Alma Gomez, the Supervisor of Insurance; her boss, the Prime Minister Dean Barrow, and the Attorney General. They say that the Government failed to protect them under the Insurance Act. These claimants say that as part of the process of granting CLICO licenses to do business in Belize, they were supposed to regulate the company, so that a statutory fund be set up. You could think of it as a sort of consumer protection insurance for the customers who did business with CLICO. This statutory fund was supposed to be equal to the liabilities to the all the Belizean customers so that in the event of a crisis, such as the one which happened in 2009, those customers would be protected from the dangers of the insurance business climate.
The 54 Belizeans say that the Government kept granting CLICO their license to operate, even though they were failing to meet the requirement of the statutory fund, and so, from their perspective, the government should cover the 4 million-dollar liabilities.
Their case was heard in the Supreme Court by Justice Michelle Arana who dismissed it in October of 2014. They appealed it in the Court of Appeal, and in March of last year, the Court granted them a partial victory. So today, they went before the CCJ, hoping that the highest court will review the case and rule completely in their favor.
After the hearing, we spoke with their attorney about their prospect of success before the CCJ:
Andrew Marshalleck, SC - Attorney for Claimants
"I act for 54 holders of EFPA policies that were issued by CLICO. So, the appellants represent this group of 54. They held these executive flexible premium annuity policies that were issued by CLICO. And, of course, since CLICO's demise and liquidation, they have lost their monies. We bought policies that had cash values and those were lost. At the end of the liquidation there was not sufficient money to pay them what were due to them under their policies. The essence of the case is that the insurance business, as you know, is a regulated business. They're subject to the direction and control of the Supervisor of Insurance, who, in turn, answers to the Minister of Finance. And, what the law requires is that insurance companies keep what's called statutory reserves that equal their liabilities, in country, and under the control of the Supervisor. So that, in the event of a failure, access can be had to those assets to make good the liabilities to policy holders. Well, it turns out that regard to the EFPA policies, that not a cent of reserves were in place. And, it wasn't in place from the time the act was first introduced, requiring it, in 2004, until 2009, when CLICO finally was put into liquidation - or judicial management, and then liquidation. And, what we're saying is that Government should held responsible for that failure, in continuing to license CLICO, to allow CLICO to unleash these policies on the Belizean public, without the regulatory requirements having been met year after year, for so many years. The Court of Appeal found in fact that the supervisor acted in breach of her statutory duties in licensing CLICO year after year without these reserves being in place. But, the insurance act goes on, at Section 4.3, to provide for an immunity from suit to the minister and the supervisor, where they act in pursuance of functions under the act, in what the act calls good faith. So, what there is, is an immunity provision. We're pass that there was wrong doing. We're saying now, notwithstanding that there was wrong doing, the act also protect me from having to pay damages. And, they're relying on that immunity provision to escape the consequences of their failure to do - their acknowledged failure to do what they were supposed to do."
The judges of the CCJ have reserved judgment to be announced at a later date. The attorneys for the claimants tell us that the Governments of Trinidad, the Bahamas, and Barbados have all compensated the customers of CLICO in those territories who were negatively affected by liquidation crisis of this regional insurance company. They say that the Belize Government is the only one which is resisting compensation to the customers here.
We've spoken to one of the 54 customers who bought insurance from CLICO. He told us that the majority of the former customers bought this coverage, hoping to secure their financial futures, and when they learned that the Government allowed CLICO to operate in Belize without complying with the law, they were blindsided. These 54 are now trying to recover the value of the insurance policies they bought from the company.
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