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continually monitor the development of the financial system, now including the microfinance sector as a major component, and to what extent financial services are reaching larger segments of the population. The IBD recognises that less than 15 percent of poor households in the region have a savings account and only 3.3 percent have access to credit.
The insurance sector is large relative to population. The largest insurance sectors are in Barbados, Jamaica, and Trinidad and Tobago, although insurance firms are widespread in the ECCU.
The major multinational insurance companies have little representation in the Caribbean, except for the Pan American Life Insurance Group, which has offices in the region. In general, the local institutions like Seguros Banreservas in the Dominican Republic; Jamaica International Insurance in Jamaica; and RoyalStar in the Bahamas, along with the regional groups such as the Trinidad & Tobago-based Guardian Holdings, and the Barbados-based Sagicor Financial, dominate. Prior to the financial crisis that had an impact on Trinidad & Tobago-based Colonial Life Insurance Company and British American Insurance Company, they both, collectively had been one of the largest regional insurers.
The January 2009 collapse of the Trinidad and Tobago-based CL Financial Group was a major financial shock to the Caribbean region. CL Financial’s insurance subsidiaries: Colonial Life Insurance Company (CLICO) and British American Insurance Company (BAICO) were active in all 15 CARICOM member states except for Jamaica and Haiti.
Credit Unions are important players in the financial sector due to their high penetration and, in some countries, large assets. There are over 340 credit unions in the region. Over one third of the region’s population are members, and nearly two thirds in ECCU countries. In terms of assets, credit unions are very large in selected countries, including Montserrat (66 percent of GDP), Dominica (39 percent of GDP),
while their assets in Belize, Barbados, Grenada, St. Vincent and St. Lucia range from 13–19 percent of GDP. The Credit Union sector in Trinidad and Tobago is estimated at some 500,000 members, managing some $9.5 billion in assets, or almost 4 percent of the total assets of the entire financial system.
The Caribbean accounts for more than half of the global Offshore Financial Centres (OFC) flows, though much of it is dominated by territories such as the Cayman Islands. Although OFCs account for a relatively smaller share of GDP in Caribbean countries, in some countries, like Bahamas and Barbados, their economic/fiscal contribution is significant.
Given the increasingly large volume of financial flows handled by OFCs, international pressure has built in recent years to ensure these centres follow stricter, prudential and supervisory financial standards, control money-laundering activities, and limit opportunities for tax evasion. These initiatives are spearheaded by a number of different global institutions, including the Global Forum on Transparency and Exchange of Information, the Financial Stability Board, and the Financial Action Task Force (with support from the IMF). A strong understanding of the details of these different initiatives is necessary to limit reputation risks (via the possibility of black/grey listing) in cases of non-compliance.
Countries and jurisdictions hosting OFCs are taking steps to demonstrate their commitment to adhere to these international standards. Effort is needed to ensure compliance with all of the initiatives, especially as they are moving toward the mutual assessment/effectiveness stages. Indeed the empirical evidence suggests that countries/territories that adopt good regulatory standards benefit from higher inflows.