The entire government in all its branches has emerged as a major transgressor in failing to pay adequate health insurance premiums, causing the Cayman Islands National Insurance Company (CINICO) to suffer losses, and the organisation is crying out for money.

The 2006-07 CINICO annual report shows consistent losses, as expenses incurred soared above health insurance premiums paid for civil servants, pensioners, and government entities for the three financial years of 2005 to 2007. Payment of premiums in these three categories is administered by Government.

Expenses associated with seafarers and veterans also show an overall outstripping of premiums paid for the three-year period, but for the 2006 financial year there were lower costs associated with this group’s premiums, affording CINICO an underwriting income of $344,946 in that category.

Established as a wholly owned government company in December of 2003 to control spiralling healthcare costs, CINICO’s principal activity is to provide health insurance for public servants, their spouses and dependents, seamen and veterans and their dependents, as well as low income residents, and persons of impaired health.

By reason mainly of premiums paid for public workers, pensioners, and seamen and veterans being unrealistically low, CINICO has been suffering net losses.

“The majority of the underwriting losses can be attributed to Group 30100 which comprises civil servants, pensioners, and government entities. The driving factor in the underwriting losses is insufficient premium income to cover claims incurred,” the CINICO annual report stated.

CINICO’s losses chalked up for civil servants against premiums paid were $1.9 million for the financial year ending 30 June 2005; $2.8 million for 2006; and $1.6 million for 2007.

For pensioners, expenses were above their premiums by $1.9 million in financial year 2005; $575,743 in 2006; and $3.3 million in 2007. The insurance premiums paid for employees in government entities outside of core government fell below actual expenses by $327,183 in financial year 2005; rebounded to afford CINICO an underwriting income of $269,918 in 2006; but went below again by $231,950 in 2007.

CINICO’S expenditure on seamen and veterans exceed their premium by $1.1 million in financial year 2005; but the costs were low enough in 2006 for the medical insurance company to gain an underwriting income of $344,946; this account however went back into the red in 2007 when expenses exceeded premiums by $171,195.

These, along with some other areas of losses, have CINICO labouring under an accumulated deficit of $18 million at 30 June, 2007, moving from $11.8 million in 2006.

Meanwhile, a precarious cash position at 30 June 2007 had CINICO issuing an SOS to its only shareholder, government. Financial highlights show the company holding almost $10 million in cash for reserve liabilities, and its cash in hand standing at $3.1 million.

But in the report CINICO pointed out that the reserve liabilities it holds are short term because - unless cash comes from elsewhere - they would have to be paid out to claims within a year. “It is important that the company receive a cash equity injection to pay for these liabilities while at the same time effectively managing its cash flows.”

Cayman Net News was unsuccessful in attempts to contact Minister of Health and Human Services, Hon Anthony Eden, for a comment on the CINICO report before going to press over the weekend.

The Minister’s reaction to, or comments on, the report will be published in Cayman Net News as soon as the newspaper are able to speak to him.