Bank of Jamaica (BOJ) review delays forex insurance policies

It has been 11 months since Cabinet issued a directive allowing the marketing of foreign-currency, denominated insurance products, but the Bank of Jamaica (BOJ) has stalled the plan saying last week that the matter remained under review.
The Cabinet decision was relayed back in early October 2009 before the current central bank governor, Brian Wynter, took office.
The Financial Services Commission then invited companies to start applying for approval of their products, saying they would be free to issue forex policies once they got its seal of approval.
But the BOJ Act places jurisdiction of the foreign exchange market in the central bank, which has not yet given its go-ahead.
The BOJ told Sunday Business that it was a regulatory issue, and that the mattered was being studied. Requests for clarification on whether implementation would require legislative amendment were not forthcoming up to press time.
The bank is also reviewing lifting restrictions on forex financial products.
The BOJ said Wednesday that prior to the 2009 directive, just one entity, which it did not name, was allowed to trade forex insurance products, and that the situation remained the same.
Sale of insurance products is governed by the Insurance Act and its regulations, but where such products are denominated in foreign currency, issuers are directed to seek the approval or sign-off of the Bank of Jamaica before dealing them to clients, in conformity with Section 22A(2) and (3) of the BOJ Act.
On Thursday, the Insurance Association of Jamaica said it was not bothered by the delay in carrying through the Cabinet directive.
"We are still awaiting details from the Financial Services Commission and the Bank of Jamaica on how the framework will work," said Orville Johnson, executive director of the Insurance Association of Jamaica.
But, he added: "It is not a big deal right now because of the stability of the currency."
Last October, when Information Minister Daryl Vaz announced the Cabine decision,he said the Government had concluded after careful consideration that the forex products "would have limited impact on the foreign exchange market and could assist businesses that require such insurance".
Then, the Insurance Association of Jamaica cheered the announcement, saying members had been lobbying for the policy change for years.
Cabinet's decision restricted the issue of forex products to the general insurance sector.
Equity-linked and bank assurance policies do not qualify.