Published On: Thu, Feb 13th, 2014

Funding new hospital by the Netherlands deprives opportunities for Curacao

New hospitalWILLEMSTAD - The Curacao and Bonaire Insurance Association (CBIA) is concerned about the fact that the government will fully fund the new hospital (HNO) through a bond emission at the Dutch Central Bank. In this way, local insurers, banks and pension funds have no chance to invest locally.

The Central Bank stipulated that they are required to invest 60 percent of their premium revenue on the local market. The possibilities for this are limited, says the CBIA. There are no local government debts anymore.

Guaranteed interest

According to the CBIA, the problem of guaranteed interest is also an issue for local life insurers and pension funds: "The interest in individual life and pension insurance has been revised to 3 percent recently. The rate for collective pension insurance lies between 3 and 4 percent. But with many of the individual life insurance policies, there is currently a guaranteed interest rate of 4 per cent. “An insurer cannot go under the interest rate set during the duration of a life insurance. An insurer is responsible, during all this time, to achieve at least the promised interest on investments. These are periods that can last for decades.

Possibilities

“Therefore, it is crucial that there are enough opportunities to invest locally. The return on investment must thereby also be less than the guaranteed interest rate,” the organization outlines the problem. Pensioners and savers thus run the risk that their retirement and / or insured amount may not be paid. Now that there are no local investment opportunities, that risk increases.

Possible consequences

The organization of insurers is worried about the future; insurers may need to adjust their rates by lowering the guaranteed interest. People, who'd like to buy a home or want to buy individual pension insurance, will have, financially, a difficult time. We may also cut pensions, as has happened in the Netherlands. "Also, the employment in financial institutions is under pressure by this decision. Higher premiums mean less income, leading to less work, which eventually leads to redundancies,” the CBIA indicates. The Insurers believe that the Government’s policies are a proof of lack of vision, courage and a missed opportunity. "

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