WILLEMSTAD - The interests of policyholders in Curaçao are insufficiently served by unclear annual publications and the Central Bank's duty of confidentiality. That is the view of econometricians Servaas Houben and Ronald Ketellapper.
They cite the annual figures for 2020 from non-life insurer ASKA as an example. Published in various newspapers in Curaçao on January 14, 2022. Such publication is required by law and must take place no later than June 30 of the year following the reporting year. In this case, the figures should have been in the newspaper on June 30, 2021. Its delivery was therefore six months late.
“ASKA's annual results and balance sheet raise quite a few questions,” says Houben. “Apart from an explanation of its late publication, we read, for example, that there are non-admissible investments. Can that just happen?” After all, non-admissible assets are assets that are not permitted by the Central Bank to cover the technical provisions of the insurer.
The figures show that the insurer is technically bankrupt due to negative equity. “Then why doesn't the Central Bank revoke the permit?” Ketellapper wonders.
According to both econometricians, there is no explanation as to how ASKA will acquire capital to have sufficient buffers again.
Confidentiality
Inquiries with the Central Bank (CBCS) shows that answering these questions is not possible because of the confidentiality obligation that the supervisor must observe. “It's a shame, because in the example quoted, the figures do not provide a reliable picture of the real situation,” says Ketellapper.
“The insurer may well be in a temporary dip and have shareholders who are willing to make up the shortfalls in results and equity. But ASKA is also in serious trouble and continuity is at risk. Policyholders and potential customers should still know which of the two options applies,” says Houben.
The two state that there are also many questions to ask about Ennia, although they cannot be derived from recent annual figures. The insurer's last published annual report dates from 2016. “Here too, there is a lack of transparency to which policyholders and pension beneficiaries should be entitled,” says Ketellapper.
Additional Instruments
Both econometricians believe that smaller countries such as Curaçao actually need stricter supervision than larger countries. “Because in larger economies, additional correction and warning tools for clients of financial institutions are in place and visible.”
Houben mentions as an example a stock exchange platform on which shares of financial institutions are traded, rating agencies that value companies on, among other things, creditworthiness, independent financial press and consumer protection organizations.
“These additional instruments only function if there is sufficient information available on which parties other than the formal supervisor can base their judgment,” says Houben.
“However, the current duty of confidentiality stands in the way of that, and that severely restricts the view of the financial institutions. Unlike the regulator Centrale Bank van Aruba, CBCS also has no track record of proactive and timely intervention at financial institutions, which makes it even more important that other stakeholders can gain insight into the business operations of financial institutions," said Ketellapper.
Report
Houben and Ketellapper understand that due to competitive sensitivities, not all business-sensitive information can be shared with customers. According to them, a solution has been created within the globally applied Solvency II supervision regime by requiring financial institutions to publish two different reports.
On the one hand, a report for the general public that is accessible to everyone, and on the other, a report for the regulator containing company-sensitive information such as commercial results and objectives, pricing and merger or acquisition plans.
“CBCS can ensure a level playing field by prescribing a standard format for initial reporting so that clients of different financial institutions can access comparable information.”