Insurers set to gain investment flexibility

Insurance companies could gain access to a wider range of investment opportunities under proposed changes to rules governing the sector, with the Senate’s Regulations Committee raising no objections to a measure that would remove a requirement for four conditions to be met simultaneously before certain investments qualify. Deputy executive director of supervision at the Financial Services Commission (FSC) Nicolette Jenez told the committee on Thursday, during a virtual sitting, that the amendment to Regulation 47 of the Insurance Regulations is intended to widen insurers’ investment choices, which she said have been restricted by the existing rules. Under the proposed change, insurers would be able to invest in certain obligations issued by solvent institutions if they satisfy any one of four conditions rather than having to meet all four at the same time. The criteria include investments secured by adequate collateral and meeting prescribed fixed-interest requirements; investments rated as investment grade by an agency recognised by the FSC; obligations meeting prescribed earnings-coverage requirements; or obligations listed on the Jamaica Stock Exchange or another stock exchange recognised by the commission. Jenez said the existing requirements, introduced through amendments in 2022, had limited insurers’ ability to diversify their portfolios, invest in corporate debt, and support infrastructure financing. “While intended as prudential safeguards, this cumulative application of requirements has significantly restricted the range of investments available to insurers, limiting diversification opportunities, asset liability matching, participation in corporate debt markets, and infrastructure financing,” she said. Asset-liability matching refers to ensuring that an insurer’s investments can provide the money needed to meet future claims and other financial obligations. The FSC expects the amendment to broaden investment opportunities, support the development of Jamaica’s capital markets and make it easier for insurers to direct funds towards productive sectors of the economy. The proposed change also forms part of the commission’s regulatory modernisation programme and its efforts to align Jamaica’s insurance supervisory framework with international standards. Jenez stressed that the reform would not weaken the FSC’s oversight of the industry. “What this amendment will not do is to reduce the FSC supervisory authority or existing prudential safeguards,” she said. She pointed to other provisions in the Insurance Regulations, including 72(B), 72(G), 72(J), and 72(K), which set out requirements relating to insurers’ investment management and the handling of risk. The amendment follows concerns that the existing rules have made it difficult for insurers to invest in some otherwise eligible corporate obligations because those investments must satisfy several conditions at once. Finance Minister Fayval Williams announced in March, during the 2026/27 Budget Debate, that the Government intended to simplify Regulation 47 to make it easier for life insurance companies to invest in corporate debt. The Government has argued that the existing requirements restrict investment choices and limit the development of the domestic corporate debt market.