Annual Report of the Catastrophe Fund 2011
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LETTER OF TRANSMITTAL September 2nd, 2013
The Honourable Christopher Sinckler, M.P. Minister of Finance and Economic Affairs Government Headquarters Bay Street ST. MICHAEL Dear Minister: In accordance with Section 10 of the Catastrophe Fund Act, 2007-5, I have the honour to submit to you in your capacity as Minister with responsibility for Finance, the Report of the Catastrophe Fund for the year 2011. Kindly note that at the time of preparation of the report, the audit of the accounts had not been completed. The report of the Auditor General will be forwarded to you as soon as it becomes available. Yours faithfully,
Dr. Justin Robinson Chairman National Insurance Board
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BOARD OF DIRECTORS Mr. Keith “Tony” Marshall – Chairman Dr. Justin Robinson - Deputy Chairman Ms. Annice Dalrymple Mr. Dennis Clarke Mr. Jon Martineau Sir Allan Fields Mr.Vincent Burnett Mrs. Nancy Headley Senator Sir Roy Trotman
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NATIONAL INSURANCE BOARD Report on the operations of the Catastrophe Fund for the period 1 January to 31 December 2011.
INTRODUCTION The Catastrophe Fund Act, 2007 commenced on 8 March 2007. The purpose of the Fund is to provide financial aid to any low income earner who owns and occupies a chattel house where (a)
the value of the house does not exceed $150,000 and
(b)
the house is damaged or destroyed by a catastrophe.
ESTABLISHMENT OF THE FUND
Section 3(2) of the Catastrophe Fund Act, 2007-5 states that the Fund shall consist of: (a)
annual contributions with effect from financial year 2006-2007 in the sum of $2.5 million voted by Parliament for the purposes of the Fund for a period of not less than 5 years;
(b)
monthly contributions payable with effect from financial year 2006-2007 by every employed person and self-employed person in the amount of 0.1% of the earnings on which that person pays national insurance;
(c)
amounts realised from investment proceeds and
(d)
monies that may accrue from the operations of the Fund.
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ENTITLEMENT TO CLAIM
Section 5 of the Act provides as follows: (1)
Any owner of a chattel house valued not more than $150,000 who occupies that house and who earns less than $25,000 annually is, from financial year 2006-2007, entitled to a grant in such amount as is determined by the Committee in a ccordance with regulations made under this Act, where that house is damaged or destroyed by a catastrophe.
(2)
Where a house is constructed of both wood and brick, that house shall be regarded as a chattel house for the purposes of this Act, if the house is, in the opinion of the Committee, substantially constructed of wood.
(3)
For purposes of subsection (2), a house is substantially constructed of wood if at least 75% of the house is wooden.
Effective 2008-04-01 the value of the chattel house and the annual earnings of the owner were increased from $125,000 and $22,500 to $150,000 and $25,000 respectively.
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CATASTROPHE FUND CLAIMS COMMITTEE Claims are to be determined by a committee provided for in Section 6 of the Act as follows: (1)
There shall be a Catastrophe Fund Claims Committee which shall be responsible for the consideration and assessment of claims and the issue of grants.
(2)
The Catastrophe Fund Claims Committee shall consist of 6 persons, namely:
(a)
the Supervisor of Insurance, ex officio;
(b)
the Director of National Insurance, ex officio;
(c)
the Chief Fire Officer, ex officio;
(d)
the Accountant General, ex officio and
(e)
two persons who shall be appointed by the Minister by instrument in writing.
(3)
The Minister shall appoint one of the members to be Chairman and another member to be Deputy Chairman.
(4)
Claims may be made to the Committee in such form as may be pre scribed by regulations.
MANAGEMENT OF FUND
The Act has assigned responsibility for the management of the Fund to the National Insurance Board. Section 7 provides as follows: (1)
The contributions shall be paid to the National Insurance Office.
(2)
The National Insurance Board shall be responsible for the management and investment of the Fund.
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(3)
The following payments may be made from the Fund
(a)
the payment of grants;
(b)
refunds of any payment paid in excess or in error and
(c)
the expenses incurred in respect of the administration of this Act.
GENERAL Committee Meetings
During the period under review, the Catastrophe Fund Claims Committee was constituted as provided for in the Act. Mr. William Tomlin and Mr. Algernon Leacock were Chairman and Deputy Chairman respectively. No claims were received during the year.
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BOARD MEETINGS The Board held eleven meetings during the year at which matters related to the Catastrophe Fund were discussed. FINANCIAL OPERATIONS Revenue
Total revenue for the year under review was $6,484,124. Of this amount, $3,105,770 represented contributions collected from employees and self-employed persons during the year and $878,354 represented investment income. In addition, $2,500,000 was received by the Fund in respect of contributions voted by Parliament as provided for in sub-section 3(2) of the Act. Contribution income from employees, self-employed and Government accounted for 86% of total revenue. Table1 below shows the contributions and investment income distributed on a monthly basis. Table 1: Contributions and Investment Income of Catastrophe Fund, 2011
Month
January February March April May June July August September October November December Total
Contributions ($)
Investment Income ($)
Total Revenue ($)
237,377 259,373 233,529 236,028 222,015 399,705 252,474 170,840 263,730 264,291 352,959 213,449
64,394 71,524 85,515 50,611 75,383 72,259 74,981 70,868 69,556 78,111 81,876 83,276
301,771 330,897 319,044 286,639 297,398 471,964 327,455 241,708 333,286 342,402 434,835 296,725
3,105,770
878,354
3,984,124
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Table 2: Investment Income by Asset Class - 2011 Catastrophe Fund Type of Investment
Investment Income ($)
Distribution%
Treasury Bills Bonds Deposits
350,026 17,767 510,836
39.84 2.02 58.14
Total
878,629
100.0
Expenditure
There was no expenditure during the year in respect of claims as a result of a catastrophic event. In 2011, total expenditure incurred in the administration of the Fund totalled $28,814. This amount was paid to the National Insurance Fund as the Catastrophe Fund’s share of the administration expenditure of the Office. Table 3: Expenditure for the Catastrophe Fund - 2011 Month
January February March April May June July August September October November December Total
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Administration Expenses ($)
2,485 2,481 2,389 2,423 2,449 3,155 2,365 2,454 1,908 2,450 2,456 1,799 28,814
Fund Balance
(i)
Status of account balance
At 31 December 2011, the assets of the Catastrophe Fund totalled $31,591,805 made up as follows: Investments Cash and bank balance Interest receivable Other receivables Contribution receivable
26,937,520 2,342,051 354,660 440,993 1,516,581
Total
31,591,805
Table 4 shows the distribution of the Fund’s investments. Table 4: List of Investments as at 31 December 2011 Type of Investment
Portfolio ($)
Portfolio %
Deposits Treasury Bills Bonds
15,766,957 10,665,237 506,227
58.5 39.6 1.9
Total
26,937,520
100.00
The Fund’s ending balance at 31 December 2011 was $25,301,863. General
The 2011 financial statements have not been submitted for audit.
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PROSPECTS FOR 2012 The Central Bank of Barbados has anticipated that the economy will not expand by much more than 1% in 2012 because of the weakened growth prospects for advanced economies. This position is solidified by the possible impact of London 2012 Summer Olympic Games on arrivals from UK. However, it is expected that the average rate of inflation should ease somewhat if forecasts of reductions in international prices of oil and commodities hold true. Given the uncertainty of the recovery in the global market, 2012 forecasts could not be made without a considerable margin of error. With that being the case, contributions were estimated at $2.74 million and investment income at $0.92 million. In 2011, $5 million was budgeted for the payment of grants expected from the passing of Tropical Storm Tomas. However, due to the lack of legislation governing the disbursement of funds, the $5 million was never utilised. It is expected however, that by 2012 all relevant legislation would be in place. For that reason the benefit expenditure has once again been estimated at $5 million. Administrative expenses were budgeted at $27,443.
CONCLUSION The National Insurance Board expresses its appreciation to the Director and staff for the service rendered in managing the Catastrophe Fund during the year.
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NOTES
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NOTES
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