Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697727687634.pdf (Fiji)
STANDING COMMITTEE ON ECONOMIC AFFAIRS RBF INSURANCE ANNUAL REPORT 2018 [Verbatim Report] Fiji Insurance Brokers MONDAY, 27TH JANUARY, 2020 VERBATIM NOTES OF THE MEETING OF THE STANDING COMMITTEE ON ECONOMIC AFFAIRS HELD AT THE COMMITTEE ROOM (WEST WING), PARLIAMENT PRECINCTS, GOVERNMENT BUILDINGS ON MONDAY, 27TH JANUARY, 2020 AT 9.46 A.M. Interviewee/Submittee: Fiji Insurance Brokers 1) 2) Mr. Wayne Wong Ms. Sahreena Mohammed General Manager (Aon (Fiji) Pte.
Limited) Branch Manager (Marsh Limited) MR. CHAIRMAN.- Thank you Honourable Members, ladies and gentlemen.

Good morning and welcome to the Standing Committee on Economic Affairs.

Pursuant to Standing Order 109(2)(a) of the Standing Orders of Parliament, the Reserve Bank of Fiji Insurance 2018 Annual Report has been referred to the Standing Committee on Economic Affairs and has been tasked to review it and report back to Parliament.
(Introduction of team from Fiji Insurance Brokers) (Introduction of Committee members and the secretariat by the Chairman) Whatever we say here today will be recorded by Hansard as they prepare their report.

Without taking much of your time, Honourable Members, just a few housekeeping matters.
I request minimum movement during the presentation and to keep the constant flow of the presentation, we will not interfere with your presentation but after your presentation, if we have any questions we will ask them based on your presentation.

Without taking much of your time, the floor is yours.

MS. S. MOHAMMED.- Thank you very much for the time this morning.

As you can see, it is only Wayne and I this morning.
We do not represent the entire Brokers Association and there are obviously five insurance brokers in Fiji as you would know.

The large corporates being Marsh and Aon so I am glad to have their representation here this morning together with Wayne.

I guess the floor is open Mr. Chairman and if you would like to specifically ask us to cover any particular topics of interest.

I think the 2018 Report speaks for itself.


It will be at a couple of years old you could easily say, so I think it will be good if we talk about while we see the concerns and weaknesses for the next year 2020 focusing on I guess where we feel 2019 has ended.

If you are comfortable with, we are sort of talking through what we feel as the key concerns and outlooks would be for 2020.

MR. W. WONG.- Certainly, I think 2018 has set the platform for the next two years going forward and we are now into 2020.
So, what Sahreena is saying is that we should be more focussed on what has happened in 2019 as a platform for 2020.

But if your focus is on the 2018 Report, we can certainly talk about that, but it is probably historical.

So, Mr. Chairman, would you agree that we talk about the future rather than historic?

2 | Verbatim Report – Fiji Insurance Brokers Monday, 27th January, 2020 MR. CHAIRMAN.- Exactly.

In fact, Honourable Members would like to know your involvement in facilitating these claims.
As you know, I should have probably mentioned earlier, that in Fiji limited people have insurance, you talk about life insurance, health or even if you talk about house or cars.

Unlike in Australia, Victoria, I would say, if you do not have a car insurance, you cannot drive your vehicle.

You have to have a car insurance, two side.

We do not have such policies in Fiji, so we want to take 2018 as our platform and we want to see the future of the insurance brokers.
How your involvement is with the clients and the people who do the insurance?

Honourable Members, would you like to add to that?

Honourable Gavoka.

HON.

V.R.

GAVOKA.- Yes, with your permission Mr. Chairman.

According to this 2018 Report that we have received, it appeared to have been a very successful year for the insurance industry.
We highlighted this in our deliberations with the other people who presented here on how the industry has remained strong, in particular the events of 2016; catastrophe (TC Winston).

From there, we would like to know what it is the structure that is there that makes the industries resilient and then maybe from there they can take it to today and the future.

But basically, if you can start from there, on you as Brokers.
What is it that you see that has made insurance being so resilient, given the effects of TC Winston?

MR. W. WONG.- Honourable Gavoka, thank you very much.

We got some idea where we are going to start.

As you say, 2018 has continued to be a successful year for the industry as a whole.

Collectively, not all insurers made profits, but collectively they still continued to make profits or be it half what they did the previous.
I am talking from an insurance underwriting perspective, not a Broker, perspective.

The Brokers you see represented here today are basically corporate Brokers, so our focus is mainly on insuring corporates rather than individuals.

We are aware that the Governor is trying to promote inclusion for insurance with about 25 percent of Fiji’s population by the year 2020.

Hopefully that will come about.


I think Fiji Care is doing a great thing with the programme that they are running with the Government, farmers; the micro-insurance programme.

That is very affordable, perhaps not working in terms of profitability-wise, there are a lot of claims attached to it, so they need other insurance products to try and back that up.
Because the premiums are so cheap, the claims coming out of it may not be sustainable for the long run, but at this stage, I think they are doing quite well in promoting that amongst possibly 25 percent of the workforce, not the population but the workforce.

Government is doing a wonderful thing in making that compulsory for all Government workers and extending that out to the farmers, etcetera.

So that is one way of reaching out to the public.


From a Brokers perspective, we do not normally get involved with those things, although Fiji Care have made it accessible to our Broker clients at a slightly higher premium, obviously.

So if the Brokers come along, for example, with a client who has a thousand employees, we can offer that to our clients as an extension to their existing product.
MR. W. WONG.- The thing though is the corporates or the businesses have to take that on board whether they want to offer that as an employee benefit.

At the moment, most corporates for employee benefits are buying medical and life insurance already as an attraction to retain their employees.

This micro cover though is a lot more affordable in terms of premiums, but I guess the pay-outs are not as much.
You are only getting $10,000 maximum, perhaps $3,000 for death, $3,000 for accident, $3,000 for a fire and $1,000 for funeral expenses which is something, which is a great contribution.

If you have a fire, at least you have got 3 | Verbatim Report – Fiji Insurance Brokers Monday, 27th January, 2020 $3,000 to kick-off.

It is a good thing.
It is a good thing.

I am not dissing it or anything, I think we should have more of these sort of products but the affordability for employers on top of the other insurances that they may already provide to their employees might be a consideration.

In terms of promoting insurance to a wider population in Fiji, the only way that brokers can really help is to try and maintain a reasonable cost for insurance, to make it attractive for our clients to continue buying insurance.
Recently, I mentioned in 2018, you said it was a profitable year, another profitable year for insurance.

Correct!

But at 50 per cent net profit on the previous year so they did not quite do as well as you might expect.

The reason for that is that the global market is hardening.

Hardening in the sense that the cost of insurance is escalating.

It is not because of the 2016 events in Fiji, it is because of global events around the world.
We have had cyclones in Texas, we have had earthquakes around the Caribbean, et cetera.

We have had multiple tsunamis happening in Asia which have chewed up the reserves out of Europe.

So, Europe has a pie this big and when global events take away from that pie, the pie shrinks obviously, so it becomes a supply and demand situation.
In the Pacific because of our situation in the ring of fire, we all form a part of this ring of fire with New Zealand, Asia, Papua New Guinea et cetera where we are prone to earthquakes and cyclones; catastrophe events.

If it is not going to hit us this year, it will definitely hit us in the next two or three years.

They have got a programme for that and the pie for the Pacific, because of these global catastrophes is shrinking.
So, supply and demand means that if you want a slice of that reinsurance market, reinsurance meaning, the local insurers cannot afford a $100 million loss or $300 million loss or a billion dollar loss like we had with TC Winston.

They have to reinsure out of Europe.

To get the reinsurance out of Europe costs money.

At the moment, you are looking at possibly 15 cents to 20 cents, for every dollar you are insuring in property, you got to pay to pay $1.50 to $2 for reinsurance.
The cost is driving the pricing up in Fiji.

The local market officers are complaining.

They are saying, “Look, our insurance was $100 last year and now we are paying $150.

What is the goal?” It is what the current market is offering.

They have got no choice really.

If we have to go offshore because of lack of capacity locally, it is going to be worse.

We are looking at 300 percent or 400 percent increases if we go offshore.

The Governor of Reserve Bank of Fiji is trying to find ways obviously.
Fiji needs insurance.

We cannot survive without it.

Businesses cannot operate with the uncertainty that if we have a major cyclone or a major fire, they need insurance to resume or continue operations.

The RBF is trying to open up that market to find ways to keep the pricing at a sustainable level.

In 2018, we talked a little bit about it but in the smaller sector, they are talking about mums and dads, et cetera not so much the corporates.
From our perspective, the corporates are the ones that drive it, they are the ones that supply employment and they are the ones that keep the economy ticking over.

If the corporates do not have insurance then we are all really up the creek without a paddle, if you want to put it that way.

So insurance has to be maintained at a reasonable level.
A lot of corporates we have found, going forward from 2019 and 2020 have opted to reduce the amount of insurance, not so much capacity because there is not so much capacity, it is because it becomes unaffordable.

So we have got to try and maintain that balance between the client, the insurance company and the re-assurance overseas.
4 | Verbatim Report – Fiji Insurance Brokers Monday, 27th January, 2020 It probably does not answer your question in terms of spreading insurance to the masses, but our focus I think would be on keeping the employers healthy, keeping the employers in business to maintain that in an indirect way that coverage for their employees.

HON.

V.R.

GAVOKA.- Mr. Chairman, I think that is a good summary of where we are into 2018.
We got indications from the underwriters that 2019 was a better year than 2018, would you testify to that?

MR. W. WONG.- Yes, it is a bit early to tell now.

They will be producing their results in the papers shortly.

In terms of the Act, they have got to be fully transparent, yet to be seen but indications are, yes, they did do fairly well in 2019.

HON.

V.R.

GAVOKA.- That goes back to the initial observation of the Committee that, as you rightly stated, Fiji needs insurance and the corporates.
MR. CHAIRMAN.- Honourable Gavoka, shall we listen to Ms. Sahreena and then we start off, please.

MS. S. MOHAMMED.- Wayne has covered quite a lot of ground here.

All I would add to that is like Wayne has mentioned the two big corporates brokers in Fiji being Marsh and Aon, we focus a lot on large commercial corporate insurances but when it comes to the domestic space, mums and dads and small SME businesses, absolutely finding the right insurance has been a challenge.
Cyclone insurance for that matter is a challenge.

We talked about micro-insurance briefly again that does not cover for cyclones.

If you think about the climate changes that are happening and has been happening over the century, now we are looking at even with the 2019 losses, greater focus on climate related, weather change and natural disaster events, we see the need for there to be a solution to the domestic space and the small SMEs on cyclone.
And unless we change our building codes in Fiji for that matter, possibly a solution maybe not, and is more and more resilience built into the way codes are structured, the way buildings are constructed, buying cyclone insurance would be very, very difficult because you will have to partner with an insurer that is actually willing to offer cover, albeit at a small form of cover to that sector.
Obviously knowing that we are in a market space where unfortunately we are in a region where the probability is one cyclone a year.

That does not help the actuarial team when insurers have reinsurers sitting behind them, looking at the numbers and possibility of losses, et cetera, with one cyclone prone to happen in our region every year as a probability, it does not help our case.
So Parametric Insurance has been one that has been spoken about in recent times again, finding a cover that is affordable, is another question because Parametric Insurance is not very viable in certain instances.

Those of you that are not familiar with Parametric Insurance, it is basically looking at covering a scenario, so an event happening that triggers the policy response as opposed to damage occurring.
So, example if a Category 4 cyclone enters into the Fiji waters within a certain vicinity, it ticks the boxes based on what the criteria of the parametric recovery is then they would be 5 | Verbatim Report – Fiji Insurance Brokers Monday, 27th January, 2020 covered.

I know that there is some work happening in the background in that sector but again the affordability of it would be one that would have to be tested.
I mean we have seen from 2016 TC Winston occurring through to now, QBE a major player in Fiji has drawn back capacity to a great scale.

And that capacity, Wayne would agree has been difficult even to-date to replace locally.

So we have to then go offshore to buy cover in an already complex environment with natural disasters globally in the rate that it has been happening.
Reinsurance driving costs up globally, Fiji is a dot on the map and a region that is very active as Wayne has indicated due to the locality in the geographic that we are surround by, it is actually capacity shrinking as we speak.

So for global markets to look at good quality capacity for Fiji, we have to start changing the way we do things.
A lot of the corporate businesses have started to do a risk modelling, so they understand what is the exposure rather than buying insurance because you need to buy insurance.

You look at actually what are we requiring cover for, what is our risk and then buying minimum levels of cover that would reflect giving you protection to your actual exposure and affordability of insurance.
So that is really where we have been in the last few years and we do not see that to be changing substantially, the situation if anything will continue to deteriorate.

MR. CHAIRMAN.- Thank you so much.

Honourable Gavoka, your question please.

HON.

V.R.

GAVOKA.- Just a few takeaways from that observation.

When you talk about Fiji being a small dot in the Pacific and we go overseas for reinsurance, what is our rating like?
What is the reception like from the overseas underwriters when Fiji knocks on their doors?

MS. S. MOHAMMED.- I will start then Wayne can follow.

Not very positive.

Globally it is quite a challenge now I am talking about large commercial co-operate businesses here.

It is quite a challenge to be able to differentiate a risk to an insurer because you have got underwriters, reinsurers and again just one step back, so you have an appreciation of how the insurance industry works.
You have got layers of layers and layers of reinsurers.

So you would have an insurer that runs and you can have, in some instances eleven layers of reinsurance.

So the insurer will reinsure that the insurer will reinsure, they also sort of share of the risk.

Those insurers at different layers would be reinsurers to the typhoons that have happened in Japan, to the earthquakes that happened in USA right to the cyclones that hit the Bahamas for that matter.

So that all has a flow-on effect to Fiji.


The world of insurance really changed when 9/11 occurred.

So your question about resilience for that matter, you know how has insurers coped all these years for the last few years in particulars is because the learning side of 9/11 which is quite a learning actually as mentioned that insurers are more receptive or more understanding of risk.
The 9/11 was an eye-opening in that what had an envisage that an act at such would occur in such a large scale to cause not only property damage but loss of lives and not only loss of lives to one or two but thousands.

So that actually threw out a lot of the actuarial stuff that were going on at that time and the insurance industry started to model risk differently.

So the insurance industry is more prepared now and there is more and more awareness on climate change now as well.
So the effect of that is also being properly modelled and insurers are becoming more and more, I guess, risk adverse understanding or through the greater technology on modelling that we have now.

I do not know if I have answered the question though but ….

6 | Verbatim Report – Fiji Insurance Brokers Monday, 27th January, 2020 MR. CHAIRMAN.- Do you want to add, Mr. Wong?
MR. W.WONG.- The overseas insurers take on Fiji is, like you said, we are not just a dot in the ocean, we are in the middle of that ring of fire that we are talking about which is prone to catastrophe events.

Sahreena mentioned a couple of things, parametric which is a good thing and probably the Government may need to look at that from a country’s perspective.

I think we have proposed something similar in the past but because of budgetary constraints, et cetera.
If we are looking at reception to Fiji, the premium for a parametric could be as high as 30 percent or 40 percent.

So, for every dollar you want to insure, you would be paying 30 cents or 40 cents because it is a trigger event; Category 4 cyclone happens, it does not matter what damages it causes, you still get a pay-out.

The trigger is the Category 4 cyclone.


So, the predictability one in a year, no insurer sitting up in Europe is going to stick their hand up and say, “all right, we will charge you 10 cents, which is one in ten years when I will get my money back.” They will hike the premiums up because we are prone to this catastrophe event.

Parametric can work around many things.


It can be working around cyclone, rainfall, crop type insurance that we have heavy rainfall, if we have more than say 50 millimetres in a week and it causes floods, which could be the trigger that we will look at as a parametric.

But the premiums will be worked out according to the historical checks and how frequent these things happen before they will set the premium.
However, parametric like you said in last week’s meeting is the flavour of the year so to speak, so the cost is a consideration if we want to go that way.

It will be a great thing.

For TC Winston it would have worked, obviously we get a Category 5 cyclone and we had a $100 billion worth of cover, it may have cost us a couple of hundred million in terms of premium but we would come out on top at the end of the day.

Now, finding that couple of a hundred million is another big question.
So, in terms of reception to Fiji risks, we are not seen as the solution to the re-insurers aim for profits.

They know if they invest in Fiji, they are going to lose at least one out of three, one in three years they are going have to pay up, big time.
Whether they jump on the wagon this year, pull out next year and hopefully nothing happens, they may make some dollars but it is not a long term thing, they would rather stick their money in Europe where there is no cyclones, no earthquakes and better returns.

Fiji is being driven to buy reinsurance at such a high cost because they can sell it elsewhere at a higher rate.

They can sell it to the Bahamas for 1.5 cents to 2 cents.

Why are we giving it to Fiji at 1 cent or less?

It is a market driven thing.


Fiji might be an attractive place for tourism, et cetera but we do have large claims when there is a cyclone event and mostly in the resort areas as well, that ones that get hit.

So, yes resorts, attractiveness, nice place to visit, very hard to ensure.
MS. S. MOHAMMED.- May I just add to that, if you allow Mr. Chairman, the affordability of insurance is obviously something that is very closely looked at and monitored and the brokers in particular play a big role in that as well.

I think it is fair to say that unless we look at alternatives which businesses, large corporates are now doing, it could be in the near future very possible that cyclone cover will not be affordable at all for Fiji.
A good example is the Californian earthquake, it is very difficult to buy earthquake cover for California.

7 | Verbatim Report – Fiji Insurance Brokers Monday, 27th January, 2020 Earthquake cover for certain parts of New Zealand is not possible to buy.

Large corporates look at alternatives in terms of how else we can insure.

It is a matter of time that the global appetite for Fiji cyclone risk continues to shrink even further.
Some of the large corporate insurances that we put in place last year, we really struggled to put away a 100 percent cover for cyclone.

Now that does not mean a 100 percent of, say, an asset that is worth $200 million, but even a 100 percent of what we feel would be a viable insurance exposure is sometimes a challenge to put away and the affordability comes into it as well.
Most big corporates are even taking a gamble now on the fact that probability of Category 4 TC Winston happening again in the near future is not quite there, so therefore let us try and buy a cover for a smaller limit as opposed to the large limits that they have enjoyed all this while.

HON.

V.R.

GAVOKA.- Mr. Chairman.


I go back to a time, I was a hotelier when cyclones were so frequent and devastating, exactly what you are sharing with us today, it happened then, to the extent that we hoteliers could not secure any cover from anywhere at that time, you know the period I am referring to.

The RBF had set up a facility for us to carry our own insurance.
I am Chairman of a provincial cooperation and our insurance cover had also virtually doubled or something, which as you say, is happening across the board now in Fiji.

That is a very valid observation given that the typhoon, the cyclone thing for us in Fiji.

It will be nice if you can come out with some alternatives that you could consider to provide cover across the country because, as you say, we need insurance.

It is such a vital part of our economy, the financial system.
You are the advisors to your clients and sometimes you are the underwriters also.

When you talk about alternative measures, have you ….

MS. S. MOHAMMED.- Yes, it comes down to affordability.

Some of the alternatives, one of which we have spoken about is parametric insurance, so that is definitely available, but albeit at quite an expensive cost, the cost of putting away such a large premium for an event that may not happen is also a big gamble for big organisations.
Some of those large businesses where the cost of insurance increases in a harder market, they look at alternative financing options as well.

Likes of, say, forming a captive insurance or self-insurance, in other way putting money aside rather than paying an insurance company to allow for future losses.

Forming a captive insurance is not simple as well.

You have to go through proper licensing, reserve capital requirements that have to be met.
For business even thinking about captive insurance would have to go through a proper feasibility study to understand, is it something that is going to work as a vehicle for finance alternative financing as opposed to transferring it solely to an insurance company.

So that is another option as well.

The other option is really, we have already covered that and we have already started working with lot of our large corporates and commercials to look at how much insurance is required, what is the risk.
There are a lot of large corporates that do collective covers now, whereby they insure, for example, multiple resorts, multiple properties, if there is a parent company with multiple subsidiaries with different occupations, they try and cluster the insurances together into a collective arrangement.
Again, more commodity, greater assets to insure, obviously you have bigger premium pool, therefore, you can hopefully attract a lesser premium rate, but then again the risk there is knowing how much to insure and what an exposure could look like so that you are not left exposed and underinsured if an event did occur.

8 | Verbatim Report – Fiji Insurance Brokers Monday, 27th January, 2020 MR. CHAIRMAN.- Honourable Gavoka, please go ahead.

HON.

V.R.
HON.

V.R.

GAVOKA.- Talking to the underwriters the other day, there is this challenge on this fronting phenomena.

People who come here and set up and eventually take things away from you guys.

We rather, that people who are committed to Fiji take care of our insurance, not people who come in front and go on.

I believe some of these are quite huge.

What are your thoughts on how we can protect ourselves, you the players who are important to us from this fronting phenomena?
MR. W. WONG.- Firstly, fronting is probably here, something that is being battered around recently.

It is not a new thing.

It has been around for ages but in Fiji, it is illegal.

It is built into the Act that you cannot front in Fiji.

That is the protection that the underwriters have at the moment and for this fronting arrangement to go any further, it would need parliamentary approval to change the Act obviously.

You cannot operate against the law so compliance is the first thing.
From a broker’s perspective, fronting provides a solution to the capacity problem that we are facing at the moment.

When I say capacity, the markets cannot sustain or cannot provide cover for the risks that we have.

We can only place 50 per cent or 60 percent of the risk especially cyclones, what Sahreena was talking about.

If fronting came in, there would have to be some measures about vetting the insurance companies that actually front in Fiji.
We do not want fly-by-nighters that come in with no solvency.

We need to check their capacity to pay claims.

Fronting is an arrangement similar to reinsurance.

It provides extra capacity to an already shrinking market in Fiji.

The underwriters do not like it because obviously it will take away some of their premiums but for the general public, it provides more capacity and hopefully some competition to keep the premiums at a reasonable level.
The fronting arrangement usually involves a local insurer anyway.

For example, New India Assurance or QBE Insurance or Sun Insurance would need to write the policy on their paper and a 100 percent cede the risk back to the fronting entity offshore.

The insurer offshore guarantees 100 percent payment of claims.

The local insurer issues the policy with a fee or a small percentage that they keep themselves.

In other words, that is what fronting is all about.
It is similar to reinsurance where, for example, Sun Insurance goes out and arranges an annual reinsurance treaty that says, “You will cover all my catastrophe risks and for every event, I will pay $5 million and you pay the rest.” Fronting is basically another form of reinsurance but it is illegal in Fiji so when that changes then we could probably talk about that.

But as a broker, we are all for it because it improves the capacity and hopefully keeps the premium at a comfortable level.
MR. CHAIRMAN.- Thank you so much for your response.

Honourable Tuisawau, your question please.

HON.

RO F. TUISAWAU.- Thank you.

Regarding medical insurance and noting the current situation we are facing with the coronavirus, et cetera, and the impact on corporate businesses.

What are your views on the current medical insurance market and how it is operating?

Also, on medical emergencies, its impacts and also on the insurance industry?

MS. S. MOHAMMED.- Thank you for your question.


9 | Verbatim Report – Fiji Insurance Brokers Monday, 27th January, 2020 Coronavirus in particular has not been given much focus from an insurance perspective here in Fiji yet, but, the most recent one we have seen has been measles of course.

And whilst most local hospitals have picked up obviously the vaccination, the Ministry had as well picked up the vaccination quite early looking at prevention rather than cure as such.
The cost of vaccination is not something that is picked up by the medical insurers at this point in time.

Some organisations run wellness programmes and there is a bit of concession allowed for that in the insurance coverage, it just depends on how your policy is structured.

But medical in general in Fiji, obviously our public medical facilities, our public systems are not that equipped yet to cater for some of the complex medical conditions that we are now seeing in Fiji.
We have seen a huge rise in cancer related events in the last couple of years and coronary heart disease has been on the rise as well.

So what we have been doing as an initiative is really educating through our HR Divisions of our large corporates on just wellness of staff.
You know thinking early about the issues that can be faced in Fiji, sharing the statistics on the information that we have collected through the quarter for that matter from the ministries and from our own experiences on evacuation cases et cetera, on things to look out for and how you can change a little to gain a lot in the health sector.
But, we have seen lot of evacuation in 2019, much more than the previous year and some of the private hospitals in Fiji have been able to pick up on treatments to a degree, but, we still are as a nation lacking on the resources available on the ground on some of those complex matters.

And we are seeing as India picking up a lot of those evacuations now, medical conditions.

Our facilities are great as well, the only downside is the actual flight to India which is quite a distance away.
Obviously, New Zealand and Australia are at our reach, much more costly from a medical treatment perspective than one-third or fraction of what you could obtain out of a treatment in India.

Hopefully that sort of answers some of your questions.

HON.

RO F. TUISAWAU.- Yes, thinking more of business interruption in terms of such emergencies like coronavirus.

MS. S. MOHAMMED.- Sure, I can answer to that as well and then you can add.
Insurance policies actually exclude infectious disease cover for business interruption.

There used to be a point in time that policies used to cover it but of course experiences have drawn on the fact the risk is real.

You could have infectious disease outbreak occurring in say a mall situation where the mall needs to be shut because there has been an outbreak and to maintain the spread of it, the public forums or public places are shut down for that matter.
Again, we are moving away from the core of a business interruption insurance.

The purpose of business interruption insurance primarily has been, “I take on and a response to property damage”.

So if there is property damage, which flows on to the interruption of the business, the primary purpose of what business interruption insurance is designed to provide.
But over the years as competition has grown, insurers have started to throw in all these different forms of risk that can potentially trigger a business interruption, not necessarily damage to the primary property as such, but, with experience as time have tested that some of these add on and tag on have actually resulted in significant amount of claims into our policy, then insurers have started to unbundle those additional coverage that have been thrown in.
So 10 | Verbatim Report – Fiji Insurance Brokers Monday, 27th January, 2020 we have seen that infectious disease has been one that has been excluded by probably global policies from what I know but definitely none of the local insurers and business interruption policies provide for that.

HON.

RO F. TUISAWAU.-Just another one on statutory and compliance requirements with regards to Reserve Bank of Fiji, et cetera.
Do you have any issues with that or would you like to let the Committee know of any suggestions you would have regarding that area - compliance and statutory requirements?

Thank you.

MR. W. WONG.- A very good question.

We actually are very thankful that the Reserve Bank of Fiji is there because it obviously keeps us on our toes and we all obviously need to be compliant with the Fiji Insurance Act which the Governor of the Reserve Bank of Fiji is very stringent on maintaining.
They come and do audits at our offices frequently, I think every quarter we do a return and every six months they do an actual physical audit to ensure that we are compliant.

The Governor is actually being well, throughout history and recently as Monday we have had a sitting with the Governor himself to analyse what the state of the economy is doing, what is happening in the insurance industry and we actually discuss the fronting arrangement as well.
So the dialogue is there with the Reserve Bank of Fiji to try and improve the industry as a whole.

So we obviously look forward to having more dialogue with the Governor.

We have recently re-established or trying to re-establish the Fiji Insurance Brokers Association or the Governor refers to us as the Licensed Insurance Brokers of Fiji and that is just being an initiative from Bill Higginson at Aon recently.
He has got the five brokers together to form this association with the intention of not only approaching the Governor as a collective association but also promoting the knowledge of insurance broking in Fiji.

So we are looking at ways to up skilling our members in Fiji on ways of dealing with insurance and corporate risks across the board basically.

Yes, in answer to your question, we find the Governor a lot more helpful rather than a hindrance.

MR. CHAIRMAN.- Thank you for your response, Mr. Wong.

HON.
HON.

V.K.

BHATNAGAR.- Thank you, Mr. Chairman, through you.

Thank you for the presentation, Madam Sahreena and of course Mr. Wong.

Actually the 1998 Insurance Act is under review so basically we have to make some recommendations on that as well.

Are you all for the review?

What would be the impact of the review on your business?

Are there any things which you want to be changed in the review or some things which are in the process you do not want to be there?
MS. S. MOHAMMED.- Thank you, I will start with the comments.

As Wayne has said the Insurance Brokers Association has just been reformed and we have had our first, I would not say it was a full on meeting with the Reserve Bank of Fiji yet, but now that we are in the process of reforming we are not actually licensed yet, we have to pay our normal tax dues as well and register appropriately.

So it is still early days for us but absolutely we wish to be more involved in the process.
The Insurance Brokers Association has not gone through a consultative process as such from what I am aware off.

But definitely we are for it, the Act is overdue for review absolutely.

11 | Verbatim Report – Fiji Insurance Brokers Monday, 27th January, 2020 Two key aspects such as looking at the fronting arrangement, absolutely from a brokers perspective, we are all for it.
As indicated by Wayne on the positives that we see as brokers serving our clients and finding solutions and risk based solutions for our clients.

Also, we understand that the insurers solvency is also looked at, which again is not a bad thing but we just have to mindful of how that all comes together, because there is only a handful of insurers in Fiji.

Again even a smaller number from that handful that we have, that have got capability to ride large risk.
So, we would certainly like to see the presence of that continuing if not, more competition brought into Fiji with larger corporate global insures opening doors here to create more competition and better capacity for our market.

MR. W. WONG.- I am all for reviewing Acts but in terms of changing an Act for the purpose of change is not a wise thing, if the Act is working fine for the last 22 odd years, certainly a review is welcomed.

We would like to obviously participate in there.


The two things Sahreena touched on, there are obviously such activities, if we are going to change the Act to open up the market, we have to protect our local guys as well.

So, there should be some parameters around how far you can go with this fronting arrangement.

The solvency, five local insurance write general business in Fiji.

They are struggling at the moment to meet the solvency rating; some of them are.
If we do change that, it may force some of these underwriters to close, that is really the bottom line.

So, if you are going to look at solvency, it has got to be reasonable, you want to promote business, not kill them off.

If they can survive with that sort of current solvency rating then certainly it should let it lie then.

HON.

RO F. TUISAWAU.- So, you are saying that you are happy with that marginal solvency?

MR. W. WONG.- Well, yes and no.


I am all about reducing risk and the more solvency that you can get, the better but then you need to obviously let the individual companies work that out for themselves.

If they want better protection, they are going to find it.

The fact that you have got 1.5 to1 at the moment is a minimum, it is not saying you have to reach because that is the minimum.

You can have 3 to 1 if you want to but that is really on the business themselves to protect themselves.

HON.

V.K.
HON.

V.K.

BHATNAGAR.- Thank you Mr. Wayne, according to Reserve Bank Report, the current situation is the solvency position is pretty strong but yes we have some concerns raised by others like Sun Insurance and once the Act is reviewed, it will impact the solvency status position.

I thank you for that.

Madam Sahreena you mentioned that absolutely finding the right insurance is a challenge.
Looking at the Government’s incentives in place, bundled insurance where the farmers are covered, the poor, fire, death benefits, et cetera as you mentioned in your presentation Mr. Wong is covered.

But there is still a market which maybe is left out there.

What are you doing to be inclusive of that market?

What is your awareness on the ground?

What are the strategies in place?

MS. S. MOHAMMED.- Thank you Madam.


So, when you are talking about a market, you are talking about an industry sector that may be left looking for insurance.

12 | Verbatim Report – Fiji Insurance Brokers Monday, 27th January, 2020 HON.

V.K.

BHATNAGAR- (Inaudible) MS. S. MOHAMMED.- Sure.

MS. S. MOHAMMED.- Insurance is available, the most challenging aspect is cyclone cover for those different sectors that are around.

For example, I will pick the construction sector for that matter.
We have been taking part in a few forums that have been run by the construction sector to also educate that segment in the need to ensure at the right time, for right amounts for that matter and for the right level of cover.

So, again, cyclone is also a challenge for the construction industry.

So I think insurance by far is available as a solution for most industry sectors in Fiji.

It is just a matter of how much cyclone cover you are able to buy, come back to that, that has been one of the key aspects.
Then we look at the professional sectors, for example, the likes of medical practitioners or valuers for that matter or architectural industry.

We find that the professional indemnity risk, for example, errors and omissions arising out of medical malpractice or errors and omissions arising out of miscalculation by valuers.

That is an industry sector for which insurance for professional indemnity has been quite challenging.

Not only for Fiji but globally, because of the nature of the risk that it covers.
So that is also a challenge.

For us, it is just a matter of finding different global insurers around the world and I think the beauty of large global corporate brokers such as Marsh and Aon at this time is the global reach that we have and the large network that we have having presence around the world to find a solution somewhere, in some form.

I guess that is the beauty we have to offer.

Those are some of the challenges we face.


If we know that there is something that has been a challenge in a particular region and there has been a solution that has been derived, then we are able to absolutely latch onto that and offer that in some here, provided we have got an insurer in a market that is available to write that risk for us.

But we are finding professional indemnity along with cyclone being the two major aspects that we are challenged with finding cover for in the current market.
MR. CHAIRMAN.- Thank you for your answer.

Just to add on what Honourable Bhatnagar has mentioned.

Fiji is unique outside in terms of the natural disasters.

Is it possible for the Brokers Association, which has just recently formed, to design a tailor made product for Fiji specifically in these areas?

MR. W. WONG.- I always say there is always a possibility finding insurance for anything.

Really, London will look at everything, it is the affordability that comes with it.
If you are looking at from a country’s perspective, we certainly would be able to assist with some numbers if you are keen to look at that, parametric, for example.

In terms of spreading insurance across to the new SMEs, et cetera, just in answer to your question, to add onto Sahreena, because we are corporate Brokers, the focus is really not on small businesses or start- ups, unless they have some major backing from their parents offshore or it is a global international company.
We have, however, invested, we recognise that the SME business space is a growing market.

The underwriters certainly have products for them, so we have actually invested, I think about 10 percent of our workforce in focussing on SME-type business where we package 13 | Verbatim Report – Fiji Insurance Brokers Monday, 27th January, 2020 together SME products and sell them to the lessor-sized businesses in the start-ups that we were talking about.

The bottom line is yes, insurance is available.


If they do not go direct to an insurer, they can come through a broker.

Of course, the premium should be the same.

It should not make any difference to the premiums.

We have to be careful though that we do not want to over- extend our resources where we fail our bigger clients because of time spent on the smaller ones.

We will need to obviously make that balance call as well.

MR. CHAIRMAN.- Thank you.

HON.

V.R.


GAVOKA.- Given the current situation, the challenges with climate change and all that, the cost of insurance and you were saying earlier that people need to be very careful that it is no longer just insure for insurance sake.

You play a very big role in advising customers on what kind of insurance they should carry.

In today’s situation, the reality of the day, what would be your priorities for a company to consider?
MS. S. MOHAMMED.- Insight into understanding what climate change means for a business is very important.

I think we talk about climate change, we talk about natural disasters but I think understanding what does that mean to the business and what business continuity planning has been invested in the business is very important for survival of any organisation.
Not only looking at the fact that a disaster could happen and what would that disaster look like from a damage perspective but also looking at what resilience can be built in our business today or invest into the future to be able to have a positive outcome of an event.

An example we look at often, I mean, unfortunately resorts and the tourism sector for us it is an attraction obviously for all parts of people being drawn into Fiji and we have to be in a coastal environment.
So we cannot ignore the fact that our large resorts sit in a coastal area exposed to the likes of cyclone, sea surge and tsunami risk for that matter cannot be helped but absolutely one thing an organisation could look at is how do we construct our properties so that we are actually resilient to any act of cyclone occurring or sea surge occurring as an example or you could put a manufacturing business for that matter into playing a similar kind of thought as well.
What resilience can I build into my business so that I am not only relying on one customer or one supplier for that matter if a natural disaster wereto happen?

What does my supply chain look like?

Where else could I go?

An infrastructure organisation such as the Water Authority of Fiji (WAF) or Fiji Roads Authority (FRA) could look at how do we construct our pipes for example, or do we construct our roads so that we are resilient to natural disaster events.
We, undoubtedly, are in an environment where we are going to be prone to more and more of natural disaster risks such as flooding and changes in the warmer weather patterns, bringing more storms our way.

We cannot control that.

What is in our control is actually understanding your business, understanding the impact of what that would have on our business and then building good disaster recovery business continuity planning and resilience in your business to be able to positively come out of an event.
MR. CHAIRMAN.- Thank you for your response.

MR. W. WONG.- Just to add to Sahreena’s comment.

Insurance is only one part of risk management.

Insurance will only cover about 30 per cent of your balance sheet so what 14 | Verbatim Report – Fiji Insurance Brokers Monday, 27th January, 2020 Sahreena is saying is, to understand your risk, what are the things that you cannot insure or you can insure and let us tackle those.
If I am going to have a cyclone, for example, the building code in Fiji is quite resilient to cyclones at the moment and we have seen that in the recent cyclones that come through.

There is not much property damage for insured properties.

That is largely contributed by the change in the building code from 1985, 1986 cyclones that you were talking about where we had no insurance in Fiji.
The Insurance Brokers Association actually got involved with that and did a deal with London to say, “look bring insurance back to Fiji, we will improve our building code”’, which they did eventually come back in the late 1980s.

So we had a number of years without cyclone insurance in Fiji.

We had looked at other ways of managing that type of risk, but, like I said, insurance only covers about 30 percent of your balance sheet.
You need to understand your total risk of what you need to do to reduce that risk.

So if you are prone to cyclone damages, et cetera, find a way to reduce that interruption period.

You will have a cyclone, you may have some minor damage but you have got standby people to come and fix it in a short space of time.

Those sort of things you might need to.

Insurance in Fiji is a funny thing, there is no compulsory insurance left anymore.

I wish it was compulsory, that will actually keep the premiums low.
If everyone bought insurance, the prices would be a lot different.

It is a voluntary type of thing and people only buy insurance out of necessity or the banks need it which is not the ideal way, the mindset is not there.

You talked about Melbourne, you cannot drive without car insurance.

About 50 percent of our cars are only insured on the road, we have multiple accidents where they do not have insurance at all.
If we make those things compulsory obviously the premiums, there is a bigger pool to play with, underwriters can manage their portfolio a bit more.

So that is probably something to think about, start with motor, then to medical.

Medical costs are escalating by 10 percent every year offshore.

How do we keep the premiums low when the cost of medical 10 years ago was a fraction of what we are paying now?

So something to think about.

The Government has gone a long way to providing free medical.

HON.

V.K.
HON.

V.K.

BHATNAGAR.- Yes, I was going to bring that up.

A medical cover on health insurance for every Fijian.

MR. W. WONG.- Yes.

Again, who is going to fund it?

Are businesses geared to provide $300 to $500 premiums for each of their employees; something to consider.

But, if you made it compulsory, that is going to be an added cost to the business obviously.

MR. CHAIRMAN.- Thank you.

HON.

V.R.

GAVOKA.- Yes, last one.


When you talk about fronting because some of these huge risks like the resort that is vulnerable to tsunami, et cetera.

I am given to understand from the underwriters that, that is not placed through them, it is direct thing between the resorts today and the overseas insurers; is that happening?

It is kind of news to me that they would go directly overseas as opposed to coming through a local Broker or maybe you have some action or are part of that action.
But I was told that some of these big stuff are going directly overseas.

15 | Verbatim Report – Fiji Insurance Brokers Monday, 27th January, 2020 MR. W. WONG.- Yes, some are and some are using local Brokers, but, of course, we got to follow the Act.

The Act protects all local insurers first, so they can only go offshore if the policy cannot be placed in Fiji or the offshore policy provides a lot wider coverage or the premiums are cheaper by 15 percent and that is built into the Act.
To go against that obviously is a breach and could up with a fine and a jail term, but, if you place cover offshore you have got to apply through the Reserve Bank for permission to go offshore and whether they use a broker or go direct, as long as they comply with that regulation then they are fine.

The thing that is driving a lot of these premiums offshore now is that lack of capacity locally.

The local market does not have the capacity to write the business.
QBE like you said dropped $4 billion of their asset portfolio.

At a $9 billion they had to drop $4 billion off because the cost of reinsurance was killing them.

It costs too much to reinsure their property book.

That $4 billion ended up somewhere, whether it ended up in the local market or direct through London or Singapore or Australia or New Zealand it had to be placed somewhere.

You cannot just let $4 billion worth of risks sit idle.
So if they go direct offshore, it is probably through their parent entity, they might have multi-nationals that they are placing their covers with.

Hotel change, for example, Marriott Group, Sheraton Group those sort of things, Accor so they go on the global programme.

It is a fraction of the cost compared to what they would pay locally.

So on the global programme they might pay $10, locally they might pay $100, not buying that, just saving money going on the global.

The capacity is not available here.


We have to go London, which is a reverse.

Locally we will pay $0.30 cents to $0.40 cents, in London we will pay 1.5 percent to 2 percent.

They are forced into those situations because you cannot find it locally.

But the parent ones makes sense because they are going on the global programmes at a fraction of the cost.

HON.

V.K.

BHATNAGAR.- Honourable Chairman, if I am not wrong, you the link between the customers and the insurers and all those.
Is there enough awareness on the ground that people should go for insurance covers; health insurance, there are numerous covers.

Basically still there are a large number of people who are a little bit ignorant on that part, they are not insured at all neither do they have a life insurance cover nor a medical insurance or any sort of insurance.

Do you think there is ample awareness on the ground for them?

Why should they get insured?


MS. S. MOHAMMED.- I think there is room for improvement, Madam, because I do not know what the statistics for Fiji is in terms, of example say, the volume of life insurance or medical for that matter.

But absolutely there is always room for improvement.

As Wayne has mentioned, being in the corporate space, we provide a lot of education to our corporate clients be it one on one or through industry forums in terms of the need for insurance.
And employee benefits is part of organisations wellness programme is something that we promote as well.

But on an individual level, absolutely room for improvement.

We need to obviously look at forums that are opportune to actually be talking about the importance of this sort of protection for the family for that matter or for individuals, most on mortgage protection perspective, medical, life insurance being are few that I can think of.
16 | Verbatim Report – Fiji Insurance Brokers Monday, 27th January, 2020 MR. W. WONG.- The reality is affordability at the end of the day.

If I did not have to buy insurance, I would not.

Usually if the bank is involved “yes” you have to buy insurance but for me personally, I am fortunate that the company actually buys medical and life insurance for me so that is a big plus as part of the employment package.

But if I had to go out and buy it on my own, I would look for the cheapest product available.
HON.

V.K.

BHATNAGAR.- I mean your business is all dealing with corporate businesses but remember when FNPF used to get deductions and contributions from people who were only working like employer, employees.

But later on they opened a market to every individual with the minimum amount being $7 as voluntary contribution.

In that way they started saving money, people volunteered to put in their $7 a month; that was a minimum and people could put any amount.
So that was like voluntary and people are starting to save through that.

Maybe if there is a cover for every individual that this is the minimum insurance payment you can do, be covered under a general cover of some sort, I think some companies should come up with a policy as such so that they feel safe and secured in some way.
MS. S. MOHAMMED.- Yes, most corporate organisations do know due to talent retention for that matter built into the employment contract as part of their retention strategy to offer compulsory covers on behalf of their staff, even if it is for a small amount with the opportunity for the staff to actually purchase more.
But again in terms of applying it blanketly, to the example every contributor of FNPF example will be something that needs to be looked at from a legislative perspective as far as how can that be achieved, that is if it is legal to do so or not as well.

But absolutely, those sort of offers are there?

As Wayne said affordability and making sure that one is able to exert compulsory requirements through a forum which is legal to do so.

MR. CHAIRMAN.- Thank you so much.


That brings us to the end of this session.

Any final questions?

Thank you ladies and gentlemen and the Honourable Members, thank you so much for your time.

Apologies, I am a good friend of Ms. Sahreena Mohammed and Mr. Wayne Wong - thank you so much for your time.

We cherish and acknowledge your contribution towards this 2018 Annual Report.
Once again thank you for your time and coming on board before the Economic Affairs Committee and we look forward for more participation in the future when we get the 2019 and 2020 Reports.

We want to set a platform so that all the players are contributing equally.

MS. S. MOHAMMED.- Thank you Mr. Chairman, may I just finish with are few comments if I may, if time permits?

MR. CHAIRMAN.- Please go ahead.

MS. S. MOHAMMED.- Thank you.


Obviously we spoke about climate change quite a bit today and it’s topical on everyone’s agenda.

The 2019 Annual Report, I am sure Marsh does and Aon has actually conducted an Annual Weather Climate and Catastrophic sort of events Report for 2019, which is available on our website.

So, I would encourage, it provides insight and powerful data.
One thing we are saying about the changing world is we are more, at our grasp rather our artificial intelligence and data available to properly map what is going on around the world and what that may mean for us.

17 | Verbatim Report – Fiji Insurance Brokers Monday, 27th January, 2020 So, those sort of data are now available as well through the report that has been undertaken for 2019 and I would encourage those that are actually keen to understand that, it is available on our website.
MR. CHAIRMAN.- Thank you.

Your final words Mr. Wong.

MR. W. WONG.- Thank you for this opportunity and I hope what we mentioned showed some insight into what is happening in the industry.

Certainly who said it was easy working in Fiji in the insurance market, it is quite the opposite.

Vinaka.

MR. CHAIRMAN.- My personal experience with both the companies has been great.

Marsh is handling general machinery.

Once I had an accident with general machinery, it did all my work.
I have a good friend, Salesh in your company and I worked in both the companies.

Thank you very much for your service and both are excellent when I met them during an accident cover for my car.

I am sharing my personal experience and thank you so much.
The Committee adjourned at 11.04 a.m. 18 | Verbatim Report – Fiji Insurance Brokers Monday, 27th January, 2020 STANDING COMMITTEE ON ECONOMIC AFFAIRS [Verbatim Report of Meeting] HELD IN THE COMMITTEE ROOM (WEST WING) ON THURSDAY, 16TH JANUARY, 2020 VERBATIM NOTES OF THE MEETING OF THE STANDING COMMITTEE ON ECONOMIC AFFAIRS HELD AT THE SMALL COMMITTEE ROOM (EAST WING), PARLIAMENT PRECINCTS, GOVERNMENT BUILDINGS, ON THURSDAY, 16TH JANUARY, 2020 AT 9.55 A.M Interviewee/Submittee: Reserve Bank of Fiji In Attendance: 1.
2.

3.

4.

5.

Mr. Ariff Ali Mr. Poasa Werekoro Ms. Vilimaina Dakai Mr. Lepani Uluinaviti Mr. Mervin Singh - - - - - Governor Chief Manager Financial System Development Chief Manager Financial Institutions Manager Financial Supervision Manager Corporate Communications MR. CHAIRMAN.- Honourable Members, ladies and gentlemen, bula vinaka and a very good morning to you all.

We welcome our visitors to this Standing Committee meeting today.

The Committee meeting is important, as you know.


We definitely analyse a lot of reports and today amongst us, we have got a very hard working team, the Governor of Reserve Bank of Fiji (RBF), Mr. Ariff Ali; Mr. Poasa Werekoro, Chief Manager Financial System Development; Ms. Vilimaina Dakai, Chief Manager Financial Institutions; Mr. Lepani Uluinaviti, Manager Financial Supervision; and Manager Corporate Communications, Mr. Mervin Singh.
Lady and gentlemen, we welcome you to this Committee meeting today and would like to introduce my team.

(Mr. Chairman introduced the Committee Members and Secretariat) I will request minimum movement in the room today during the presentation.

Gentlemen, we are here to discuss the RBF Insurance Annual Report 2018.

We thank you for giving your Report in advance, I would say.
As soon it is due, you are one of the teams that submits your report in advance, like the Fiji Development Bank, who have always been on the par, I would say.

Gentlemen, we welcome and without taking much of your time, the floor is yours.

MR. A. ALI.- Thank you, Honourable Chairman and Honourable Members for the invitation to Reserve Bank of Fiji (RBF) to come and talk about the Insurance Annual Report 2018.
I would like to start off by clarifying that Ms. Vilimaina Dakai is the Chief Manager Financial Institutions and not the Financial System Development Manager which Mr. Poasa Werekoro is heading.

The RBF always welcome such opportunities to explain to the Honourable Members of Parliament what, why and how we do the work that we do.

Today, we have got a written presentation, basically highlighting what is in the Insurance Annual Report because previously, we normally get specific questions to answer.
So, today I will just briefly go over what is in the Insurance Annual Report and then we will welcome any questions.

As you may be aware, the RBF is mandated under Section 165 of the Insurance Act, to submit Insurance Annual Report to the Minister for Economy by 30th June of the following year.
The Bank continues to effectively meet this requirement, needless to say, the RBF continues to receive positive S/C on Economic Affairs Interview with RBF Officials Thursday, 16th January, 2020 ----------------------------------------------------------------------------------------------------------------------------------- 2. feedback on this publication as an excellent source of information and statistics, on an important sector of the economy.
Please, allow me, therefore, to provide an overview of the 2018 Insurance Annual Report before we open up for any questions.

The 2018 marked both, the end of a full year of recovery for Fiji since the devastation of TC Winston and a return to normalcy for the Fijian Insurance Industry, as it was spared from further losses of the catastrophic events and most insurance entities recorded positive results.
The total assets of the Fijian Insurance Industry grew by about 9.2 percent, or about $95.5 million to $1.8 billion in 2018, underpinned by the Life Insurance Industry sector.

The Industry made up around eight percent of the total assets of the financial system.

While the number of life insurance policies enforced increased by 2,977 in 2018, there was a significant decline in the general or non-life policies, compared to 2017.
This reduction of approximately 124,000 policies arose because of the transfer of the Compulsory Third Party (CTP) class to the Accident Compensation Commission Fiji (ACCF).

If you discount these policies that were transferred, the General Insurance Industry benefitted also from an increase of approximately 1,100 policies in 2018.

The Insurance Industry’s combined gross premiums grew by about 7.5 percent to $347.9 million in 2018, supported by growth in both, life and general insurance sectors.
A marginal pick-up in the contribution of the Industry to GDP was also noted, with gross premiums as a percentage of GDP registering at 3.4 percent compared to three percent the year before.

The gross premiums of the General Insurance Industry grew by 8.4 percent to $205.7 million, despite the transfer of the CTP Insurance Class to ACCF, underpinned by renewals and new policies issued for the motor vehicles class and continued uptake of the micro insurance bundle product.
The life insurance sector recorded the turnaround with 6.2 percent increase in gross premiums to $142.2 million from a decline in 2017, and is attributed to the continued uptake of investment link endowment policies.

Honourable Chairman, the risk transfer role that insurance industry provides is vital to the sustainability of our economy.

Insurance provides the necessary safeguard for the financial help of individuals, families, communities, businesses, financial institutions and the economy as a whole.
A key safeguard, therefore, is in the form of claim payments, and a total net claims and policy payments increased by six percent to $223.3 million in 2018.

The general insurance sector’s net claims paid out increased by 7.8 percent or $104.5 million, due to the settlement of major fire claims.

Similarly, the life insurance sector recorded an increase of 4.5 percent or $218.8 million in 2018 as matured policies accounted for majority of the payout to policyholders.
Honourable Members, insurance companies can only honour their claim obligations if they are adequately capitalised through a buffered level of solvency capital, and I am pleased to report that the Insurance Industry was assessed as sound throughout 2018 with both, life and general insurance sectors, reporting strong solvency positions.
These sound solvency positions were supported by positive profitability positions of both sectors, although profitability reduced from the level recorded in 2017 by 30.1 percent or $23.7 million, as a result of high loss ratio for the fire and motor CTP Class.

The sustained, safety and soundness of individual insurance companies is also supported by effective reinsurance arrangements.
Reinsurance premiums paid by General Insurance in 2018 totalled $56.6 million, with total reinsurance recoveries reported at $23.8 million.

S/C on Economic Affairs Interview with RBF Officials Thursday, 16th January, 2020 ----------------------------------------------------------------------------------------------------------------------------------- 3.

The Insurance Industry also places a significant role of supporting economic growth as it recycles premium back into the economy as investment capital.
In 2018, the life insurance sector’s investment portfolio grew by $121 million to $1.2 billion, investing mostly in Government or Government guaranteed securities, totalling about $719 million, and listed and unlisted equities of just below 300 million and properties of about $104 million.

The Insurance Industry as a whole held deposits in the banking system, totalling about $224 million as at December 2018, supporting the banks’ ability to provide loans for consumption and investment purpose.
Honourable Members, in addition to our core financial stability work, the development mandate of the Bank calls for extended efforts on inclusive insurance initiative.

We wish to briefly provide an update on the work undertaken by the Bank in this space in 2018.

Let me start with the Bundled Insurance Product.


Following the successful launch of the FijiCare Micro Bundled Insurance Product in 2017 for about 11,600 cane farmers, the cover was extended in early 2018 to the dairy farmers, 258 of them; copra farmers, just below 100; and 63 rice farmers with the premium as low as $52 per annum or $1 per week.
The Product was further extended to civil servants and social welfare recipients, totalling just over $110,000, which brings to the total number of bundled insurance holders to 120,671.

At the end of 2019, the number further increased to just over 135,000.

During the year, a total of 837 insurance claims were made, valued at $1.4 million.

This increased significantly in 2019 with approximately 3,800 claims paid out, totalling $6.5 million.
The Bundled Product has significantly increased the take up of insurance in Fiji, specifically from those who have never owned insurance, and has also assisted in the creation of awareness on the benefits of having insurance with the grassroots people.
The RBF has a vested interest in such a trend for another reason, as the increase uptake allows Fiji to remain on track to achieve its “percentage of adults with insurance product” - National Financial Inclusion, core indicated target of 25 percent by the end of this year.
On Agriculture Insurance, the RBF sought to assist in the reactivation of the Agriculture Insurance National Working Committee, to engage with relevant stakeholders on exploring opportunities to introduce agriculture insurance in Fiji, to adapt better to climate change and disaster risk.

We work closely with the Ministry of Agriculture in this area and dialogue is continuing, and we are also talking with some key agencies to help us develop a product for Fiji.
With regards to consumer protection, the RBF received 48 insurance-related complaints in 2018 and this accounts for less than 1 percent of the outstanding claims reported during the year.

Most of these claims were in the area of customer service, and 39 of these were settled during the year with one withdrawn.

I can also report that eight pending complaints reported in 2018, have now all been settled.

We continue to work with the Industry to ensure that an efficient redress process is undertaken.
Awareness on consumer rights and responsibilities are created in the Complaints Management Process, with consumers encouraged to seek independent advice and ask questions on aspects of their policy that they do not understand.

S/C on Economic Affairs Interview with RBF Officials Thursday, 16th January, 2020 ----------------------------------------------------------------------------------------------------------------------------------- 4.
Let me now just very quickly take you through some key highlights for 2019.

Honourable Members, we usually conclude our review with the outlook of the next 12 months, but given the timing of this presentation, we can also report on the year that has just ended, although our 2019 Report will be released in June 2020.
Honourable Chairman, 2019 was also a quiet year for the insurance industry in terms of the absence of major catastrophes, but there have been major losses in the fire class, exposing some insurance entities to significant claims.

The transfer of the workers compensation class to the Accident Compensation Commission of Fiji has not impacted the profitability of general insurance companies so far.
Although the Industry’s performance was expected to reflect the economic slowdown generally experienced through most of 2019, statistics for the first three quarters of 2019 has shown otherwise.

On a consolidated basis, the Insurance Industry continued to register improved profitability results, and stronger solvency positions.
However, we expect that some major claims are yet to be reported when the annual 2019 statistics are confirmed, giving rise to claim payments by the general insurance industry in 2019.
In conclusion and in outlook, Honourable Chairman and Members of the Standing Committee, with respect to our priorities in the next 12 months, the RBF will continue to work on strengthening its supervisory role, including the review of existing supervision policies and the development of new guidelines in line with international supervisory development and sound policies.
A key policy development initiative that we had worked on in 2019 and we will continue to undertake in 2020 is the confirmation of the conduct regulator role of the RBF, in addition to its prudential regulator role.
Acknowledging the extreme importance of appropriate market conduct and culture, as we have witnessed in the recently completed Royal Commission in Australia, the RBF has, therefore, initiated a review of the culture, and conduct risk management frameworks of all our supervised institutions, including the insurance companies and brokers, and will finalise a supervisory guidance on this in 2020.
Furthermore, we continue to test the revised Solvency Guidelines in 2018 and 2019 while awaiting the finalisation of the review of the Insurance Act.

With the partnership of licensed entities, we continue to be challenged to think ‘outside the box’ and be part of the national solution to ensuring Fiji’s resilience against the risk and effects of climate change, given the rapidly evolving developments and disaster risk management.
We will continue to discuss with the industry on the design of insurance products and insurance arrangements that will specifically meet the growing needs of our people.

The Insurance Act 1998, now more than 20 years old, is undergoing a review with the technical assistance of the IMF, with the aim of modernising the legislation to incorporate recent industry developments and supervisory practices.
These developments include exploring the fronting arrangements, the possibility of allowing captive insurance frameworks, and further clarity around the legal provisions for inclusive insurance.

Honourable Members, we continue to see the effect of natural disasters locally and globally, evidenced by the vivid images of the devastation caused by the current Australian bush fires, the recent earthquake in Puerto Rico and the one recently in the Philippines.
That is claimed to have changed the landscape of the country and for us the expectation that Fiji may be in the path of a number of tropical cyclones in the remainder of this current cyclone season.
The magnitude of economic and social losses S/C on Economic Affairs Interview with RBF Officials Thursday, 16th January, 2020 ----------------------------------------------------------------------------------------------------------------------------------- 5. caused by these natural disasters reiterates the importance of not only having adequate insurance coverage in place but also enhancing insurance affordability.
There is indeed an ongoing need for the industry to not only promote insurance awareness to the general public but also develop and offer innovative insurance solutions that meet the needs and affordability of all Fijians.

The RBF is committed to continue to work on the necessary initiatives to achieve such outcomes.

Honourable Chairman and Honourable Members, thank you again for the opportunity to discuss the 2018 Report and we welcome any questions or clarifications.

Thank you.
Thank you.

MR. CHAIRMAN.- Thank you, Mr.

Governor, and thank you so much for the comprehensive presentation.

Indeed you have highlighted many things here.

Before I open the floor for questions from my Members, just one small question, Mr.

Governor, on the Bundled Insurance Product, how would people accept that?

Would you like to highlight a little bit on that?

MR. A. ALI.- The good thing about the Bundled Insurance Product in most instances is that, people are not paying it.
For example, when it was introduced for the cane farmers, the Sugarcane Growers Fund made an announcement that they will pay the premiums for the farmers for three years.

I think there is a similar arrangement for the copra and rice farmers, and for the Government’s civil servants and social welfare recipients, the premium is paid by the Government for them.

For a lot of people, this is an opportunity to learn what an insurance product is.
Given that 3,800 people benefitted from the claims last year, I am sure now people are appreciating why we all need to take insurance, whether it is micro life, you and I may take insurance for a car or for a house, people realise the importance, so hopefully this is the way for people to be educated about why we all need to take insurance.

MR. CHAIRMAN.- Mr.
MR. CHAIRMAN.- Mr.

Governor, you will be surprised that I met a number of people during our Talanoa session and I learn that there are a lot of civil servants who do not have any insurance and in these days, if someone passes away in the family, this is the money they use which is amazing, I would say, and I congratulate you and your team for thinking along this line and promoting this very good Bundled Insurance Product.

Honourable Members, the floor is open now for your questions.
Honourable Viliame Gavoka, your question, please.

HON.

V.R.

GAVOKA.- Mr.

Governor, thank you for the presentation on the Report which is always welcome by the Committee.

This is my second Term in Parliament and I always look forward to the briefing by the RBF and your work also in insurance.
When you see a huge climatic thing like TC Winston, now for someone like me who has been around for quite a number of years, there is always the fear that one day, one such event could really impact on our insurance industry in a manner that could see its ‘collapse’, if I can use that word.

Having been through those cyclones - Oscar and the four, I think we had four there over four weeks, some years back.

There was always this fear that you can drain out all or whatever reserve you are having.
But, reading the reports and that the insurance community is very healthy after two years of TC Winston, what have you learnt from all these?

The kind of disaster and the way that the insurance community was able to hold together, what was the lesson or what have you learnt from these?

S/C on Economic Affairs Interview with RBF Officials Thursday, 16th January, 2020 ----------------------------------------------------------------------------------------------------------------------------------- 6.
MR. A. ALI.- Sir, thank you for that very excellent comment.

Let me go back to the need for the engineers’ certificate.

I think they were the events of 20 years ago when some cyclones really impacted Fiji and there were large payouts that this whole issue of the engineers’ certificate came about, making sure that your house is built up to standard and is strong so that it can withstand.
One of the good things, while on one hand the requirements of the engineers’ certificate is up here but it then helps you to make your house stronger so you are not affected; that is one.

The second thing is that we have a number of general insurance companies operating in Fiji that are branches or subsidiaries of insurance companies that operate in the rest of the world.

They have huge capital.


When you look at it, they are established individually because it is not that there is their branch in Fiji but all over the world.

That is the second part because they have huge capital overall.

The third part, I think, is that when insurance companies take a policy from you and I, what they do is that they then reinsure themselves, so there is a reinsurance market.

As I said, last year they paid a premium of about $66 million or somewhere around $60 million - reinsurance.
If somebody insures a hotel, they do not take all the risks.

They then reinsure themselves with London or Singapore or somewhere else.

What it effectively means is that they manage or pass on some of the risk to somebody else.

In the event that this building or this hotel is destroyed because of fire, they do not have to pay everything from their own coffers but they will get funds from the reinsurance companies to pay them.
But, of course, if insurance companies do not do much of their reinsurance then they are exposed locally.

One of the things that we work with them very closely on is to see what percentage of their portfolio they do reinsurance.

HON.

V.R.

GAVOKA.- Yes, it is important to us as parliamentarians, as well as the people of Fiji to always know that the structure in place will withstand any kind of disaster that comes our way, given the days we live in.
That, I think is very important, to always remember and to always assure the people of Fiji that our insurance community is in good hands.

MR. A. ALI.- I just want to say that following TC Winston, the number of funds that were received from offshore because of reinsurance or insurance paid offshore was in excess of $150 million, so basically, money came from offshore because either it was reinsurance or the insurance was placed offshore because the local insurance industry could not write it.
MR. CHAIRMAN.- Thank you, Honourable Gavoka, for your question.

Honourable Inosi Kuridrani, your question, Sir.

HON.

I. KURIDRANI.- All right, Sir.

Good morning, thank you so much, dou yadra vinaka.

Thank you so much for the presentation.

My question relates to this lapse of policies.

I understand that Fiji is anticipating a downturn in the economy and one issue that we raised in our earlier discussion is the high number of policies that are being lapsed.
What is the RBF planning to do to help the policy holders, at least we have noticed that a lot of people are losing their jobs, what is the Reserve Bank of Fiji planning to do just to maintain that policy so that people actually benefit from what they have paid for?

Sometimes I think that most of the workers are now being terminated, losing their jobs, when they only have a few years for the maturity of the policies but without that continuity of payment, they lose everything.
I understand there is some value but is there anything that the Reserve Bank of Fiji has in plan to maintain that policy, either get some money or source it from the Economic or Climate Change Fund or FNPF at least just to maintain it?

Thank you.

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MR. A. ALI.- Thank you.


So, one of the things that you will see with Life Insurance Policy and if you look at our data, there is a high rate whereby people take policies, but within the first 12 months they surrender and that should not happen, the policies lapse because this is during the first 12 months.

In the first 12 months I think that you do not get paid anything, if I am correct.
So, there is a combination of two things: Firstly, when insurance salesmen or agents come and talk to you, a lot of people are excited because they see the returns and they do not realise that this is going to impact their fortnightly pay in terms of how much you can spend on other things and a lot of them surrender within that 12 months.

If you look at the data over the last 10 years to 15 years, it seems to be stable.
Then there are other issues whereby you surrender or you are unable to pay half-way through or within two or three years.

In those cases, you are paid but you are not paid the full amount because there is a formula that... MR. CHAIRMAN.- It is the surrender value.

MR. A. ALI.- Yes, the surrender value, so you get your surrender value.
One of the things that I mentioned earlier while we were doing this market conduct or culture conduct is that there is always the saying that a car salesman or an insurance salesman can even sell a queen-size bed to the Pope but you know they are very good.

MR. CHAIRMAN.- Yes, the real salesman.

MR. A. ALI.- So, one of the things that we are trying to get is to talk to the insurance companies to ensure they do not oversell.
If you look at the Royal Commission in Australia, sometimes they see that the people at the mortgage brokers have oversold.

So, one of the things that we really need to tell our agents and have a better feel is making sure that if a person cannot afford, do not sell it to that person or if he can only afford a premium of $10 a fortnight, that should be it and not over-sell and say the benefits of paying $50 or so.

The last thing is that, insurance have come out with the Endowment Policies.
This is a good thing, for example, if you harvest your yaqona, you get money at once.

Instead of paying premiums - $100 or $500 every fortnight, you agreed to pay $5,000 upfront and then you do not have to pay anything.

So this is something that I feel is a new thing that LICI has done, and I understand the other insurance companies are also working on it, whereby you pay at once because the problem with us is the discipline of paying every fortnight or every month.
So, this endowment policy is good, for example, you harvest your yaqona, you harvest your crop, you can pay all at once and it has the same benefit as that; so that is something.

With regards to getting funds from somewhere else to pay for individuals, I think we really have to look at it because we have to look at the downside of it.

There are people who may afford but then say I cannot afford because they want to tap on into this Fund.
So we just have to be careful about the risk that we create also by people trying to benefit from these types of things, so we have to be very clear.

The other important thing is using FNPF money.

We are the supervisors of FNPF and we think that there has been a significant improvement over the last 10 years in particular in terms of the reforms, et cetera.
We do not want people to find an excuse to tap into the FNPF money which is retirement money just to pay off their insurance, so, we just have to be careful about these things.

HON.

I. KURIDRANI.- Yes, that was the word I was trying to get, that you can do lump sum payment.
That is good because nowadays we expect downturn in economy and most people will lose their jobs and some people just have a few years to continue and complete the maturity date, so it is good that you have that provision that you can make a full payment.

Thank you.

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MR. CHAIRMAN.- Just to add on that Honourable Member, there is a lot of things that you can do.

If you buy insurance policy for first 18 months for some policy in two years, you do not get any interest.

So, if you lapse your policy there, that means you have lose your money and then after that once you start getting your interest, then if you think of just leaving the policy you will get some money there.
If in case your policy is for 10 years and you pay for five years and after that maybe someone loses his job, you can repay from the interest that you had earned, or you can extend the date of the expiry of your insurance.

For example, you have an insurance for 10 years and in the fifth year you lose your job, you can resize your policy.

You can extend it for a further year which is there.

Honourable Viliame Gavoka your question, Sir.

HON.

V.R.
HON.

V.R.

GAVOKA.- Just back on that, I noticed on Page 28 of the Report, that there has been some improvement on the lapse policies.

I think it came out very strongly in about two years or three years ago when we saw about close to 60 percent of the policies were lapsing.

But I think we highlighted it in one of those Reports but I am happy to see that on Page 28 that some improvements has been seen.
Mr. Chairman, on determining the liquidity ratio you have, we require them to maintain a certain level of liquidity, the insurance people.

How often do you monitor that?

Again I am coming from the perspective of ensuring that everything is hunky-dory kind-of-stuff.

MS. V. DAKAI.- Thank you, Honourable Member.

Yes, there is a process of reporting to the RBF on a quarterly basis for all insurance companies.
So part of the information that we receive are to do with statistics around liquidity, how much they have at a certain time that they are able to have in order to pay any claims that may arise in that quarter.

And then we do our own analysis, whether that liquidity is strong based on our criteria or just above what they need to have or is it poor.

And there are supervisory actions that are taken after that.
Yes, there are times when some entities do face liquidity constraints and that is when we take supervisory actions accordingly.

HON.

V.R.

GAVOKA.- I think, Mr. Chairman, from the Committee, we just want you to be very vigilant on that.

Thank you.

If I may, Mr. Chairman, on the Bundled Insurance, it has really increased penetration, I mean, this was something that we are always highlighting in those years, the low penetration for insurance.
But these ones have only gone down to the grassroot level and appears to be working very well, and you are looking for 25 percent by 2020.

That is quite remarkable because I think it was 10 percent at one time, or around that figure.

You looked at this because it works and because someone else is paying for it.
I have always maintained that if you really want to increase penetration in this country, it is got to be compulsory in some way, like the way we used to pay third party policy because in the times you live under today, like you said if the insurance level has been high in this country, that income that came after TC Winston - $150million, could have been much greater, so it is a win-win thing.

The more people buy insurance, the more this country benefits.
There was this case with the general insurance sector where a lot of people do not seem to see the need to insure their homes, I mean, we were told that these palatial homes up in Namadi and Princess Road, some are not insured.

So that uptake thing is still a question.

Hopefully, we will talk to other players and then see how we can improve on that.
S/C on Economic Affairs Interview with RBF Officials Thursday, 16th January, 2020 ----------------------------------------------------------------------------------------------------------------------------------- 9.

But going back to my initial observation, that because someone else was paying for it and because it was compulsory in some way, the penetration has increased.

MR. A. ALI.- That is a valid observation.


So people at the low-end of the economic spectrum, when we did a demand survey a few years ago and asked them about insurance, a lot of them said that, first, they are not aware and, second, their basic needs, their children’s education, paying for the rent, is more important than insurance.

So, affordability comes in.


A lot of them said, “We leave it to God.” There are people who have paid off their houses and are not paying insurance because the house is paid let us not pay.

But all it does is, once you get hit once, then you realise why insurance is so important.

So, it is better to park a small amount of money in every payday in every month, pay insurance because in the event something happens, you do not have to run around asking others to help you.
The example I always give to my team and the people outside is the health insurance is similar to the house insurance or car insurance.

I will give an example, a few of my staff who did not have insurance and they had to go to overseas for medical treatment, costing tens of thousands of dollars, had they put aside a small amount of money, they would not be asking people to help them, or dip into their FNPF or dip into their savings.
So, insurance is placing money for the rainy day and that is what we really want people to do.

It is a saving, you put a small amount of money so that you save.

In the event something happens, you do not have to ask people for help.

Mr. Chairman, there is one other thing that I may just want to highlight, can I speak not just a Governor of the RBF but also as Chairman of the ACCF.
There has been some report in media and I am happy that the CEO has clarified in today’s paper that the ACCF has paid out about $7.5 million to-date.

As of today, they have just below$21 million sitting in a Trust Fund.

As the Honourable Minister highlighted the last time, this is ring-fenced.

So, only the Permanent Secretary for Economy can transfer funds money from there, but it only goes out to pay for claims, it cannot be used for anything else.

So, there is $21 million sitting there.


There are a number of claims that are currently being processed.

One of the things that people need to understand is that, for injuries and suppose you are hurt in a car accident or get injured, the doctor will initially make an assessment but once you recover, then they make another assessment to ascertain the extent of permanent disability.
Initially, you may think it is 5 percent but it may end up to 20 percent or initially you may think it is 5 percent but it may ends up as 1 percent.

So once permanent disability is confirmed by the health specialist, then payment is made.

So there is this window that people need to understand, that they need to wait so that they are paid with the appropriate amount.
But contrary to what is in the social media is that, there is enough money in the trust fund and that is not used for anything else, but purely for compensation for those who are covered under the Accident Compensation Commission.

So it is for motor vehicle accidents, workplace injuries and schools accidents (if there is injury in school).
I know the Honourable Minister had highlighted in a previous submission where there is ring-fenced around the money that is collected for the ACCF levies, there is actually a fence’s rate.

MR. CHAIRMAN.- Thank you so much, Mr.

Governor, for highlighting that because I understand social media is probably twisting things around.

Definitely, your payment is made once permanent disability is been determined.

We do not want to underpay anyone.

So, that is what you have highlighted very well.


Thank you so much.

Honourable Kuridrani, your question, Sir.

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HON.
HON.

I. KURIDRANI.- Through you, Mr. Chairman, since we are going through this climate change, hurricane season and natural disaster are almost in every month and every year, my concern is the villagers.

I understand that insurance policies mostly cover people who are working and those who are in rural areas – semi and wealthy people, whereas these villagers they do have money through land rent, et cetera.
Is there any thought about covering these villagers making insurance payment and deducting premiums through their common land rent?

People have money but they do not understand how to go about and get insurance, especially for villagers and islanders.

Is there any idea of trying to cover them, whether it be a cyclone cover or flood cover?

MR. A. ALI.- So, I can tell you that there is work behind the scenes to have a product called parametric insurance.
The trigger is, if it is a category three cyclone and within a define area, everyone is going to be paid who is covered.

So, that is something we are working on with the Ministry of Economy, Climate Change, World Bank, International Finance Corporation (IFC) and Asian Development Bank (ADB).

The key issue here is what the triggers are, who will be covered and who will pay.
I have also been talking to the Chief Executive Officer (CEO) of iTaukei Land Trust Board (iTLTB) who is also a Board Member, in terms of whether we can get, even the bundled insurance product for landowners.

They can contribute $1 per week from their iTLTB lease funds whether this can be done.
And I feel that there is a lot of potential, particularly for the hotel workers because there is a large number of hotel workers, as well as the landowners from the lease money to, at least, start of by knowing and understanding and taking this bundled insurance product.

I also feel that there are large number, particularly dalo and yaqona farmers, who should seriously look at investing in the endowment life policy because that gives a good return.

MR. CHAIRMAN- Any more questions, go ahead please.

HON.
HON.

V.R.

GAVOKA.- Governor, I will touch on the issue about homes that are not being insured.

My colleague on my left here used to be a banker.

He said, when the loan is there, people insure their homes.

Once they paid off their loan, they forget about insurance.

There is correlation between lending and the level of insurance.

When banks stop lending, you can also see the effect also on insurance, if you look at it that way.
So, I suppose in an economy where the bankers are lending, you can also see some increases in insurance.

When he raised it, I said, “Yes, the so-called liquidity prices and all that”, so that is correlation, I believe.

But that is just an observation.

Will you be revamping the Act?

MR. A. ALI.- Yes.

HON.

V.R.

GAVOKA.- I know you have highlighted this in the other Report, when is it coming into Parliament, the likely date?
MR. A. ALI.- There has been a number of changes globally in the last couple of years with regards to insurance.

So, we are working very closely with IMF, hopefully we will conclude it from our end this year and then we will work with the Office of the Solicitor-General to have it tabled, hopefully, in 2021.

What we also do that at the RBF is that, we engage our stakeholders right in the beginning.

We do not engage them once it is a final product.


We engage them because we feel that they are very S/C on Economic Affairs Interview with RBF Officials Thursday, 16th January, 2020 ----------------------------------------------------------------------------------------------------------------------------------- 11. important.

So, we will be engaging with our stakeholders throughout this thing while we are drafting so that it is tabled in Parliament.
At least, our key stakeholders, the insurance companies, have already put in their input in that.

HON.

V.R.

GAVOKA.- Governor, on Page 21, you highlighted the ongoing training for your people.

I am always passionate about growing our own people.

What kind of courses would they be undertaking to enable them to be proficient in the field of insurance?

MR. A. ALI.- Again, thank you for this question.


I think it is a very good question particularly because we do not have insurance being brought in to universities in Fiji.

So, we have access to a number of training opportunities all over the world.

We have sent our people to as far as Italy, Switzerland, US, Singapore.

We team up with the International Monetary Fund (IMF), Asian Development Bank (ADB), a lot of other agencies for training.
Just one thing before I forget, another thing that we are working with ADB and the World Bank on housing is that; we are looking at a Bronze Product.

A Bronze Product basically, because there are a lot of people who will not be able to meet the requirements of the Engineers’ Certificate, but what we are looking at is, if they can do the strapping right and the engineers have told us that if we get the strapping right, it significantly reduces the risk of your house being blown.
So one thing that we are working towards is if we can set up a Bronze Product of making sure that if you strap your roof well, you will be covered to a certain amount, so that is something that we work with ADB, World Bank and Government on these things, so the premium will be lower but will cover, in the event your roof gets blown away.

In most instances, people’s roof get blown away, but coming back to this training, we invest a lot in training.
We send our people to courses wherever necessary and our courses are based on our needs analysis.

So we do a needs analysis every year, both as a bank and individually and we train our people.

So, we send our people to many countries in the world, you name it.

We have sent people because we feel that our people are the best investments; our resources are our people and that is something that we say.

HON.

V.R.

GAVOKA.- Thank you.


Just a last one: If there is a young man or a young woman out there who wants to join the RBF and be part of the insurance arm of RBF, what kind of degree would you encourage the person to undertake?

MR. A. ALI.- Mostly, we require fresh degree in Accounting, Finance or Economics, RBF normally takes the cream.

We pay much more than any of our competitors of people out there.

We have got good benefits, but we try and take the cream and pay them.
But a good fresh degree in Economics, Accounting Finance, has to have a good GPA.

That is our criteria in terms of any shortlist.

MR. CHAIRMAN.- Ms. Dakai, you want to add something?

MS. V. DAKAI.- Honourable Chairman, as Governor has said it rightly, there is no specific insurance degree, so a good degree and then the training happens within the bank at all levels.

MR. CHAIRMAN.- I can just recall last year in December, you had one conference on money laundering which I believe, Mr.
Governor, had run that course, am I correct - Money laundering on FIU?

MR. A. ALI.- That was done by the Director, FIU and the FIU team which Reserve Bank pay for the salaries and everything but they were ….

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MR. CHAIRMAN.- Yesterday, we were discussing on the same because FIU Report also comes through before this Committee and we were discussing the same thing with my Honourable Members.

Thank you so much, Mr.

Governor and Honourable Members, thank you very much for the questions.

We wish you all the best for your new product.

We look forward for that parametric insurance which you have just mentioned.

We wish you all the best with the team.

We want to see that the project flourish definitely.
Just to add on the life insurance which Honourable Inosi Kuridrani has mentioned, with little knowledge on insurance, there are a few things which you can do if there is a lapse on a policy.

Honourable Member is very much concerned on the life policy.

You can re-instate a policy if it collapses, that is one; the second one is, you can change the commencement date; and the third one is, the maturity date can also be extended.
I believe we will also be inviting the other insurance companies and probably we can talk to their Chief Executive Officers and informing them if their group is going for insurance as you mentioned, they should be straight and not overload or sell a product which is not affordable.

That will be the wise thing to do.

Without taking much of your time, thank you very much, Honourable Members, for your time and Mr.

Governor, thank you very much for your team.


Ms. Dakai, sorry for the wrong introduction there.

In fact, that is what is written here and I just read it from there.

We wish you all the best for 2020 and, please, when you go back to your office, pass the message of our best wishes to your entire team, thank you.

The Committee adjourned at 10.45 a.m.