Weaknesses and inadequacies in the way the Insurance Companies Control Service, the finance ministry’s supervisory authority for insurance firms, performed its duties, were highlighted in a report released by the Audit Service on Friday.
“Our service has reservations with regard to the trustworthiness of the overall risk evaluation of companies, for which there has been no on-the-spot audit for a long period of time,” the report said.
It attributed its reservations to the fact that risk evaluation, relating to the monitoring of the governance system of insurance firms, was based “to a large degree, on the judgment of the ‘first officer’ responsible for the audit.”
This made the checks of insurance firms subjective, as there was “no approved audit programme in relation to the work that an officer is expected to perform during on the spot checks.” Instead, it “is up to each officer to decide what to check and to what extent.”
Poor organisation of work and duties was a recurring theme in the Audit Service’s report, which found there were no fixed methods and procedures for the way staff carried out their checks and controls of insurance firms.
Some firms could escape inspections for years. “There is no written policy setting out the frequency of carrying out on-the-spot checks at each company, with the danger of no such check of a company being carried out for a number of years.”
The report said, “there is no defined time-frame for the checking of quarterly and annual reports submitted by supervised entities, nor is a programme prepared describing the tasks that are expected to be carried out as part of the audit by each official. Also, the start and finish dates of inspections of these reports are not recorded.”
Another example of the general laxness at Insurance Companies Control Service, according to the Audit Service, was that there was “no systematic monitoring of the findings and recommendations that arise from the on the spot checks carried out.”
The Audit Service also included recommendations for addressing these weaknesses.