US Insurance Regulators Criticised At Tripartite Insurance Fraud Conference In Guernsey

Mandy Robinson, Tax-news.com, London

27 September 2000

The International Association of Insurance Supervisors recently held its Tripartite Insurance Fraud conference in Guernsey. Keynote speaker from the US, Gary Dagan, spoke of the 'problems and weaknesses' of the insurance sector in America and said that the US should look to its own shortcomings before criticising others.

Mr Dagan, a supervisory special agent with the FBI in Washington DC, is in charge of the FBI Insurance Fraud (non-health) Programme and he also co-ordinates the Caribbean White Collar Crime Investigation Team based in Miami. In his speech Mr Dagan points to US state regulation as the heart of the problem, he says 'the major problem we face is State regulation, there are 50 States and 50 sorts of regulation. That is our great weakness, states are not sharing information across the country.'

In detailing the shortcomings of the US insurance sector, Mr Dagan continues 'the weaknesses are things like there being no requirement that people are barred from the insurance industry if they have any criminal history. Casinos have to make suspicious activity reports. They have to report any suspicions of money laundering. If casinos have to report why isn’t there a requirement that insurance companies have to report? There is a lot we still need to do about our regulatory systems.' He concludes 'we criticise other people's regulations but we have problems and weaknesses of our own.'

Also speaking at the conference was Steve Butterworth, Director of Insurance at the Guernsey Financial Services Commission, who talked about the work of the Guernsey-based Offshore Group of Insurance Supervisors (OGIS).

Founded by the insurance industry in 1993, OGIS has made every effort to work co-operatively with investigative bodies in the attempt to provide reliable information rather than letting investigators stick with pre-conceived opinions of offshore business activities. Steve Butterworth, Director of Insurance at the Guernsey Financial Services Commission (GFSC) explains in the Guernsey Press on-line news service that 'the real reason for setting up OGIS was that "offshore" was considered a dirty word ... there were lots of offshore jurisdictions who didn't regulate properly and were subject to scandals, so we set up the organisation to improve standards as far as we could and encourage others to meet similar standards.'

It was frustrating, says Mr Butterworth, that investigators assumed that there was a big difference between onshore and offshore jurisdictions, with the latter being perceived as dubious in nature: 'conclusions were being reached by bodies which had undertaken insufficient evaluation of the laws and practices of certain of their members and observers', he said.

The Offshore Group of Insurance Supervisors is of the opinion that 'the differentiation should be between well-regulated, co-jurisdictions and those which were not well-regulated and co-operative or uncooperative... members and observers were unanimous in their view that the insurance sectors under their supervision did not constitute any "material or potential threat to world financial instability."'

Member jurisdictions of OGIS must meet certain criteria before they can join the group, and other countries remain as observers until they can fulfill those regulatory standards. Indeed, says Mr Butterworth, many offshore centres' regulatory standards are higher than a lot of onshore jurisdictions. OGIS is highly regarded by the International Association of Insurance Supervisors, although it suffered a blow to its credibility recently, when Bermuda (the world’s biggest offshore insurance centre) refused to join up.

.

Recommended

Write a comment