FSM Banking and Insurance Board Holds Quarterly Meeting in Kosrae
Palikir, Pohnpei (FSM Information Services): January 5, 2010 - The FSM Banking and Insurance Board (Board) held its 4th quarter meeting in the State of Kosrae from December 17 - 18, 2009 at the Governor's Conference Room. In addition to having the Board meeting in Kosrae, the Board also undertook a public education program to educate the public on its mandates, objectives, and activities as the supervisory and regulatory arm of the National Government.
All Board Members were present, except the newly confirmed member, Mr. Joseph Habuchmai. Due to other pressing matters and commitments, Mr. Habuchmai was not able to attend the Board Meeting. Staff included the Commissioner, the Insurance Examiner and the Legal Counsel from the Department of Justice. Among some of the participants were Kosrae's Governor Weilbacher, Speaker Jackson, Lt. Governor Tosie, Chairmen Sigrah, Phillip, Skilling, Abraham, Timothy, Siba, and Directors and representatives from the Executive and Legislative Branches, plus some other people.
This was the first time ever for the Board to hold its meeting at the State level and to undertake a public educational program at the State level with respect to educating the Leadership and people about the Board's mandates, objectives, goals, and activities. In this process, the Board also solicited views and comments from the State primarily on areas relating to financial sector supervision and regulation prior to having its Board meeting.
On December 17, 2009, the Board and its staff met with the Leadership and people of Kosrae at the Governor's Conference Room. The Board presented an overview of its mandates and activities. The Board informed the Leadership and people that the Board derives its four overarching mandates from Titles 29 and 37 of FSMC: (1) to regulate banking and insurance business, (2) to undertake the licensing and supervision of bank, insurers, insurance agents, insurance solicitors and insurance brokers, (3) to protect the interests of depositors, insurance policy owners, and (4) to promote the soundness, stability, and development of the banking and insurance systems in the Federated States of Micronesia. While the Board is not directly responsible for the administration and implementation of Title 34 of FSMC (Consumer Protection Act), over the years, it has assisted customers and the Department of Justice by checking if the banks are in compliance with the requirements of Titles 34 and 11-Chapter 9 (AML). With respect to Title 34, any remedy for alleged violation is to be pursued by either the customer and/or the Department of Justice. The Board reported that all non-compliance issues that were surfaced during the past on-site visits had been documented and passed on to the Department of Justice.
The Leadership and people of Kosrae were informed that the banking system in the FSM continues to be safe and sound from the regulatory point of view, despite the global financial crisis. Key financial soundness indicators were emphasized in the briefing.
A Questions and Answers session took place after the presentation on banking and covered topics including why the Banking and Insurance Board does not regulate and supervise "non-banking" institutions. The response was that Title 29 of FSMC is specific in its definition of "bank," and thus strictly defines the financial institutions that the Board is mandated to supervise and regulate. For example, the credit unions, the development bank and entities remitting and receiving money from abroad do not fall under the prudential supervision and regulatory purview of the Board at the present time. This Q&A session was beneficial in allowing the Board and members of the leadership in Kosrae to exchange ideas regarding the supervision of the banks in the State and in the FSM.
On the Insurance side, the Board presented an overview of its mandates, objectives and activities with respect to administration and implementation of Title 37 of the FSMC (The FSM Insurance Act of 2006). The FSM Insurance Act of 2006 is comprised of conventional or regular insurance and captive insurance. The Leadership was notified that while the Board has not licensed/registered any insurer and insurance intermediaries, it is in the process of reviewing all the applications for licensing and working with all foreign insurers transacting businesses in the FSM in order to be registered or licensed. The Leadership was further told that the Board intends to resolve various application outstanding issues during its next Board meeting slated in February 2010.
As to Captive Insurance, the Board reported that Captive Insurance is new to everyone but it has licensed one captive insurance company, and that more are anticipated.
In its effort to educate the Leadership of this relatively new insurance law, the Board informed everyone in the meeting that Section 301 of Title 37 of FSMC requires that no insurance business shall be carried on in the Federated States of Micronesia, unless such business is either licensed or registered in accordance with the provisions of 37 FSMC. The Board reported that all foreign insurers transacting insurance business in the FSM must either be licensed or registered and the Board is in the process of working with all the foreign insurers to ensure they comply with the FSM statutory requirements.
A concern was raised as to the infrastructure projects in the FSM in light of the insurance statutory requirements. While the Board is very mindful of the importance of such infrastructure projects to the development of the country, the Board also reported that 37 FSMC requires all foreign insurers transacting insurance business in the FSM to be registered and transact insurance through a licensed agent, or be registered and having to post the bond if the registered foreign insurer carries risks related to Marine, Transportation and Aviation (MAT). During its meeting on December 18, 2009, the Board resolved to continue to work with the Department of Transportation, Communications and Infrastructure, the Department of Justice, other FSM Departments, and the State and Municipal Governments, to ensure that everyone is fully aware of the requirements of 37 FSMC, and that all contractors for infrastructure projects are fully aware and in compliance with provisions of the law.
Any further comments and/or clarifications on this information should be obtained from the FSM Banking and Insurance Board, P.O. Box 1887, Kolonia, Pohnpei, FM 96941, phone: (691) 320-2015 or 2064, fax: (691) 320-5433, email: firstname.lastname@example.org.
For further information on this release, please contact:
FSM Office of the President Public Information: Press, Radio, Video P.O Box 34 Palikir Station, Pohnpei, FM 96941 Tel.: (691) 320-2548/2092 Fax.: (691) 320-4356 e-mail: email@example.com http://www.fsmpio.fm/