The Bank of Jamaica, according to a recent report, said “it is waiting on the Ministry of Finance and the Public Service and Cabinet to advance the implementation of the Twin Peaks regulatory framework.” Senior Deputy Governor Dr Wayne Robinson disclosed that information, according to the Jamaica Observer, at the quarterly monetary press conference held on December 22.
The Twin Peaks regulatory framework, formally introduced in Australia in 1998, will see the BOJ’s scope expanded to cover the prudential regulation of the financial sector (its solvency and safety), while the Financial Services Commission (FSC) will supervise “market conduct, consumer protection, and business ethics” of businesses in the same sector. Market conduct involves all stages of consumers’ interactions with those financial institutions.
The proposed regulatory framework was announced by former Finance Minister Dr Nigel Clarke in January 2023, following disclosures of fraud at Stocks and Securities Ltd. The financial sector, the report stated, is expected to come under additional pressure over the next four to five quarters, as the BOJ expects the non-performing loan ratio to double from the pre-Melissa figure of 2.7 to possibly six per cent.
Two surprising omissions
A surprising aspect of the report was that even though the island suffered from the impacts of Hurricanes Beryl and Melissa in 2024 and 2025, and the central bank nominally has supervisory oversight of the insurance regulator, the FSC, there was absolutely no reference to the effects of the hurricanes on:
a) the insurance industry;
b) the significant levels of under-and non-insurance (Verisk Extreme Events Solutions estimated that the take-up rate for residential property insurance was less than 20 per cent, while smaller commercial businesses were uninsured); and
c) whether the Twin Peaks framework alone was sufficient to address the structural and other problems in the insurance industry of a small island developing state acutely exposed to climate related losses.
Is there an urgent need for more insurance sector reform and disaster risk financing in the face of escalating climate catastrophes like Melissa?
Risk and insurance
I mentioned in a recent article that for six consecutive years, global natural catastrophe losses covered by insurance and reinsurance have exceeded US$100 billion, with 2025 losses estimated at US$107 billion. Severe weather events, like wildfires and storms, were the main contributors to these losses.
One local expert said that Jamaica has seen a 10 fold increase in hurricane damage over 70 years, with Hurricane Melissa causing US$8.75 billion in direct damage in 2025. The Government’s disaster risk financing framework is dwarfed by actual losses, and there is significant underinvestment in protecting the economy from natural disaster shocks. As a result, the Government does not have the financial resources to meet the needs of all those affected. Beryl caused estimated losses of J$56.7 billion in 2024.
Our Caribbean neighbours have also suffered back-to-back Category 5 hurricanes. These events highlight our shared vulnerability and the need for robust insurance and risk-management strategies. Insurers must not only absorb financial shocks, but also support the development of resilient, risk-informed public policy and private investment to reduce future losses. Strengthening prevention, protection and preparedness is essential to safeguard lives and property. The FSC and other regional regulators, like their counterparts in Asia, have important roles to play in nudging insurers out of their comfort zones.
“The development of a technology platform that can serve BOJ, FSC, and licensees in executing their supervisory functions … drive efficiencies and the cost of supervision to all our stakeholders,” was identified by the BOJ official as one of its critical tasks. Missing from that ‘to-do list’ was the undertaking of a comprehensive consumer study designed to inform policy in relation to development of market conduct standards for the insurance industry.
What is market conduct regulation?
Market conduct regulation refers to the rules and oversight that govern how financial institutions interact with consumers throughout every stage of their relationship. This includes, in the case of the insurance industry, how products are marketed, sold and serviced, as well as how complaints are managed and how institutions communicate with customers. The goal is to ensure fair treatment, transparency, consumer protection and ethical business practices.
Understanding consumers’ perceptions about providers and their products helps regulators craft effective rules of conduct to protect consumers, ensure institutions act with honesty and integrity, conduct transactions transparently, resolve complaints fairly and speedily, and regulate how products and services are marketed and sold to prevent mis selling.
Market conduct regulation is an important construct of the International Association of Insurance Supervisors’ (IAIS) Insurance Core Principle 19 Conduct of Business. Jamaica is an IAIS member. ICP 19 states that “The supervisor (FSC) requires that insurers and intermediaries, in their conduct of insurance business, treat customers fairly, both before a contract is entered into and through to the point at which all obligations under a contract have been satisfied.” It describes the standards in pages 287 to 312.
This type of supervision is essential for building trust in the financial system and protecting consumers from harm, especially in environments where risks – such as those from climate related disasters – are increasing. Failure to understand consumer behaviours, their attitudes towards risks, and their perceptions about insurers create barriers to closing the protection gap and produce unsatisfactory outcomes for thousands of people and their livelihoods.
If you require assistance managing risks or solving insurance problems, Cedric E. Stephens offers free counsel and advice. To obtain information and counsel, please write to The Business Editor at business@gleanerjm.com or contact Mr Stephens directly at aegis@flowja.com. Letters and e mails will be edited for clarity and length.
January 15, 2025.
