St. Maarten Insurance Brokers urge parliament to end “predatory practices”

POSTED: 08/12/11 7:15 PM

St. Maarten – The St. Maarten Insurance Brokers Association (Siba) has opened discussion with Members of Parliament on the need to amend two laws that will end what is considered a predatory practice where banks sell insurance to people who take loans from them. The brokers say this practice does not allow people to consider what they can afford, robs them of their freedom of choice and puts them in an unfavorable position if there is a dispute. They also argued that it was eroding their ability to make money to pay back the very banks they had also borrowed money from and that it prevented them for making investments in expanding their businesses through, for example, hiring staff.
Siba President Neil Henderson had only briefly mentioned the need to change the law as part of a broader presentation on the state of the industry. He had preferred that the brokers return at a later date to have a full discussion on that point. That was not to be as United People’s (UP) Member of Parliament Dr. Ruth Douglas and practically every speaker after her asked about the matter. None of them had raised the issue when they met with the St. Maarten Bankers Association on Tuesday.
In response to Douglas’ question Henderson told MPs that though it may sound good for banks to market themselves as one stop shops for loans and insurances, the reality was far different.
“It is bad for freedom of choice and it is bad for the customer. We’re talking about enslavement and I believe that this parliament is certainly about emancipating our people. People should be free to choose,” Henderson said.
National Alliance MP Dr. Lloyd Richardson said he agreed with the brokers that the one stop shop took away people’s freedom of choice and asked what could be done to break the monopoly position held by the banks.
Henderson replied that the brokers were not considering starting a bank of their own and that amending the law to include a cooling off period where people can shop around and consider whether the bank’s offer is affordable.
“We are a representative body for clients in insurance and I should mention that we have also already seen banks discriminating against certain notaries and excluding some appraisers,” Henderson said.
Siba member Desmond Esdaille added, “It is a matter of survival. We have loans too and if the banks are allowed to continue taking our clients, then we won’t be able to repay them.”
UP MP Johan Leonard announced that the faction was looking at a law that would regulate the sale of insurance by the banks and use a law being drafted in Aruba as a guide. Henderson has welcomed the idea and suggested that one element of it could be the creation and installation of an insurance commission. This commission would review what is being offered by current players and newcomers to the market.
Later in the discussion, in reply to a question from N.A. MP George Pantophlet, Henderson added that while the Central Bank of Curacao and St. Maarten acts as regulator, the current laws do not have “sufficient teeth” to deal with the current marketing conduct.
“Some of the predatory behavior cannot be effectively dealt with using the current laws. We have assess the legal framework and the question we need to ask ourselves is, are we going to allow the banks to continue to force themselves on people,” Henderson said.

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