One piece of local content that Guyana is able to successfully manage is insurance
I am referring to the letter published yesterday in Stabroek News in which the Guyana Insurance Association spoke. It is nice to see that my old association is taking a public stand to represent the insurance industry and its capabilities and in doing so correct the misconception that Guyana is not prepared for so many things. People need to know that if there is one piece of local content that our country is capable of handling, it is insurance and that it did so successfully before anyone living in the oil industry was not. Demerara Mutual Life, for example, was established in 1891. Let me repeat a few lines from TIGI’s statement published earlier this month in SN: This Relationship with the Oil Industry, which included claiming that the the local insurance market cannot support the amount of insurance required to cover the environmental risk to which the country is certainly exposed due to the fact that:
1. Every insurance company in Guyana has a big brother called a reinsurance company with which they have been placing surplus and placing surplus business for over a century.
2. Every reinsurance company has a big brother called retrocessionaire who protects it from the remaining risk, and that this has robbed the economy of the flow of premiums through it, and the information that would have allowed the company to corroborate the information production. and also local content that he is probably best qualified to deliver.
Perhaps I should add that this is not a small amount of money. I had estimated the amount to be at least US $ 1 billion in premiums from all categories of insurance, including environmental damage. And this, with half the number of discoveries. In “The Man Who Saved Norway From Oil,” The Financial Times states: “In 1952, the Iraq Petroleum Company reluctantly agreed to train young Iraqis to work alongside its masters in the United States. colonial era (https://www.ft.com/content/ 99680a04-92a0-11de-b63b-00144feabdc0) These guys will always tell you a million reasons why your country can’t have a bigger share of the world ‘action. Now, if the reason is not corruption, it must be incompetence. A big area of incompetence is what is called negotiation. Whenever one has something and another wants to trade something for it, negotiating skills come into play. America’s corporate giants are past and present masters of the art. They teach it in context as part of management training. What we have done in Guyana is to destroy the only repository of such competence – the unions. Over the past decade or more, we’ve gotten into the habit of just bypassing the union and telling them take it or leave it. And we think we’re okay. Not only will the residual bargaining skills of union members wither over time since they are not used, but the skills of government officials have evaporated since they do not need them. Thus, the Guyanese citizen carries the karma of a generational failure of which he knows nothing. There is nothing that exposes the damage done to the country by the ensuing political struggle other than failures to deal properly with the oil industry.
The unions and the government may never have seen it this way, but it must be reality. An excerpt from that 3-year-old article says it all: Citing a recent New York Times article that quotes GGMC commissioner Newell Dennison as saying he only had nine technical people to regulate the industry, Mangal said that of such deficits in human resource capacity serve the interests of oil companies. Mangal said: “Sorry, the Department of Natural Resources has ZERO experienced O&G professionals working full time in Guyana. That is, not a single person with experience in negotiating developments and experience in overseeing developments (as opposed to exploration). Guyana has needed dozens since 2015, but not a single one has been hired. And why? Because the oil companies profit from it when Guyana does not have the capacity to watch over Guyanese interests. Oil companies profit when government institutions are weak. That was in 2018. 2021 is about to end. Who is really paying the price for such incompetence? Why do we continue to celebrate the glow of our children only to produce results like these when it matters? These people from these oil companies who are allowed to walk around our country cannot stand up to the majority of our students. I know. I taught some of them. We have prepared them for export. With that kind of negotiating skill prevailing, we will continue to export them. Editor-in-Chief, let me quote from a January 2017 article from the Nigeria Guardian: “The National Insurance Commission (NAICOM), the industry regulator, has revealed its intention to sanction operators who violate the local content policy by ceding companies abroad, without fully utilizing local capacities in 2017. The Commission disclosed this in a circular entitled: “Use of capacities in the country of Nigerian insurers, reinsurers and the pool before foreign facultative reinsurance”, dated December 22, 2016 and signed by the Director, Authorization and Policy. , NAICOM, Pie Agboola. The circular read in part: “The attention of the Commission has been drawn to recent practices in which insurance practitioners fail, neglect or refuse to examine and make full use of the relevant national capacities of insurance institutions. / reinsurance such as pools, reinsurers and other local / recognized insurance capacities, before requesting authorization to cede a certain proportion of certain offshore risks.
According to Agboola, “In certain situations where pools, insurers or reinsurers are offered participation, institutions are either offered a minimum proportion below their capacity or informally restricted and / or forced to accept capacity. below their respective capacities in order to justify the assignment of offshore risks. He added that “this unethical practice which undermines our collective determination to ensure the full use of available capacity in the country in accordance with the domestication and local content policy contravenes existing laws and regulations regarding insurance and will therefore no longer be tolerated in the future “. https://guardian.ng/business-services/naicom-goes-harsh-on-insurers-over-local-content-infraction/ Nigeria had to insist that this country get a significant share of the insurance business. Shall we, Guyanese, learn before the oil runs out?
Guyana Transparency Institute Inc.