Regulatory Approval Process for Life Insurance in Trinidad and Tobago

1. Approval Process of Life Insurance ProductsbyThe Central Bank of Trinidad and Tobago September18th 2006 Prepared by Marlon Marquis and Michelle Assing

2. Overview • Regulatory Role in product approvals • Approval process • Questions ?? CARTAC Workshop - September 18-21, 2006 Approval Process of Life Insurance Products by CBTT

3. Regulatory Role in product approvals • Requirement of the Insurance Act (Main sections: 24, 117-124, 132-138) • Opinion on form of policy/application/ endorsement • Must be in the public’s interest • Not fraudulent • Not unjust • Not imprudent (Proposed amendment to IA) • Ensure that the rates are approved by the actuary • Protection of policyholders’ interests CARTAC Workshop - September 18-21, 2006 Approval Process of Life Insurance Products by CBTT

4. Approval Process • Initial Review • Assessment • Findings & Recommendations • Complete checklist CARTAC Workshop - September 18-21, 2006 Approval Process of Life Insurance Products by CBTT

5. Initial Review • Review items against checklist • Policy Contract • Application Form • Actuarial Certificate • Report by the Actuary • Premium rates • Maximum commission rates • Maximum discount, if any • Marketing material • Reinsurance Treaty • Board of Inland Revenue approval, if product is a registered annuity CARTAC Workshop - September 18-21, 2006 Approval Process of Life Insurance Products by CBTT

6. Approval Process • Initial Review • Assessment • Findings & Recommendations • Review for compliance with IA and protection of p/holder rights • Complete checklist • Acknowledge & request • Policy contract • Application form • Actuarial certificate • Report by the Actuary • Reinsurance treaty • Marketing material CARTAC Workshop - September 18-21, 2006 Approval Process of Life Insurance Products by CBTT

7. Assessment – Policy Contract/Endorsement • Review for completeness (All items referred to must be present) • Contract wording must be clear • Avoid ambiguity or misleading information • Benefit provisions must be clearly communicated • Conditions and exclusions are not misleading • Ensure that all terminology used is defined • Ensure consistency in use of words / terms • Check for accuracy (Typographical and grammatical errors) • Ensure compliance with the Insurance Act Examples: • Written proof of age is a condition precedent to the payment • Cannot void due to misstatement of age or incorrect statement unless fraudulent or significant to the risks CARTAC Workshop - September 18-21, 2006 Approval Process of Life Insurance Products by CBTT

8. Assessment – Application Form • Consistency with the policy contract • Compliance with the Insurance Act • place and date of birth is required • if sold to minor must have consent of parent CARTAC Workshop - September 18-21, 2006 Approval Process of Life Insurance Products by CBTT

9. Assessment - Actuarial Certificate • Requirement of the IA • Rates must be approved by the actuary • Ensure that the actuary is the appointed actuary on file at the CBTT CARTAC Workshop - September 18-21, 2006 Approval Process of Life Insurance Products by CBTT

10. Assessment - Report by the Actuary • Ensure that the product features are the same as those priced by the actuary • Provides other useful information • Pricing assumptions • Risk profile of the product • Identify any guarantees on the product • Reservations by the actuary CARTAC Workshop - September 18-21, 2006 Approval Process of Life Insurance Products by CBTT

11. Assessment - Marketing Material • Wording must be clear • Must not be misleading or ambiguous • Must be accurate and consistent with product specifications CARTAC Workshop - September 18-21, 2006 Approval Process of Life Insurance Products by CBTT

12. Assessment - Reinsurance • Ensure consistency of the Report by the Actuary and the reinsurance treaty details • Information on the company’s exposure CARTAC Workshop - September 18-21, 2006 Approval Process of Life Insurance Products by CBTT

13. Approval Process • Initial Review • Assessment • Findings & Recommendations • Review for compliance with IA and benefit of p/holder • Complete checklist • Acknowledge & request • Product review • Policy contract • Application form • Actuarial certificate • Report by the Actuary • Reinsurance treaty • Marketing material • Completeness • Consistency • Clarity • Accuracy CARTAC Workshop - September 18-21, 2006 Approval Process of Life Insurance Products by CBTT

14. Assessment - Product Review • Description (Highlight major features) • Compliance issues (Identify non compliance with the IA) • Product risks (Identify significant risk exposures) • Reinsurance (Synopsis of reinsurance arrangements) • Summary of findings / recommendations CARTAC Workshop - September 18-21, 2006 Approval Process of Life Insurance Products by CBTT

15. Approval Process • Initial Review • Assessment • Findings & Recommendations • Review for compliance with IA and benefit of p/holder • Approve if responses are satisfactory • Complete checklist • Communicate with RO • Acknowledge & request • Product review • Policy contract • Application form • Actuarial certificate • Report by the Actuary • Reinsurance treaty • Marketing material • Completeness • Consistency • Clarity • Accuracy • Description • Compliance issues • Product risks • Reinsurance • Summary • Follow-up with company • Concerns addressed • Approval granted CARTAC Workshop - September 18-21, 2006 Approval Process of Life Insurance Products by CBTT

16. Questions ?? CARTAC Workshop - September 18-21, 2006 Approval Process of Life Insurance Products by CBTT

17. Thank you! Copies of this presentation are available upon request: massing@central-bank.org.tt CARTAC Workshop - September 18-21, 2006 Approval Process of Life Insurance Products by CBTT