by Parliamentary Opposition Leader, DAP Secretary-General and MP for Tanjung, Lim Kit Siang, in Petaling Jaya on Thursday, May 19, 1994;
Bank Negara has been most irresponsible to the 263,000 Mercantile policy holders as it had assumed control over Mercantile Insurance since 1991
Bank Negara has been most irresponsible to the 263,000 Mercantile, policy holders in making a sudden announcement ceasing all business activities and suspending all payments to claimants and creditors from yesterday.
This Bank Negara irresponsibility is all the more shocking as Bank Negara, through the Director-General of Insurance (DGI), had taken over Mercantile Insurance in 1991.
It is no comfort to the 263,000 Mercantile motor policy holders to learn that after three years of take-over by Bank Negara, the DGI had decided that “in view of the adverse financial position and as a matter of prudence”, Mercantile Insurance should be wound up unless the shareholders could inject new capital of at least RM383.4 million to rectify its solvency deficiency.
After the three-year take over by Bank Negara, Bank Negara must be directly responsible to the 263,000 Mercantile Insurance – motor policy holders for the present debacle and the Malaysian public are entitled to ask Bank Negara what it had been doing in the last three years.
Clearly, Bank Negara had failed in its take-over of Mercantile Insurance since 1991. If Mercantile Insurance had been in such a bad financial shape, then Bank Negara should not have allowed it to take new motor insurance policies since 1992.
The 263,000 policy holders had bought Mercantile Insurance motor policies because of the assurance of Bank Negara take-over and management, as they have reason to believe that their policies should be the safest of all in view of Bank Negara management.
Is this a message that in future, when Bank Negara takes over insurance companies, it is a message to all policy holders that they should abandon the company? This is therefore not only a case of Mercantile Insurance shareholders failing the 263,000 motor policy holders, but also Bank Negara failing ,the 263,000 policy holders.
After the RM30 billion foreign exchange losses scandal, the latest Mercantile Insurance scandal must raise new questions about the competence and professionalism of Bank Nega¬ra.
The Finance Minister, Datuk Seri Anwar Ibrahim, should intervene to protect the interests of the 263,000 motor policy holders, and ensure that the 263,000 policy holders do not have to pay the price for the failure of Bank Negara since its take-over of Mercantile Insurance in 1991.
The Finance Ministry should ensure that policy holders, claimants and creditors get dollar-to-dollar payment and not 70 sen on each RM1 from the Insurance Guarantee Scheme Fund (IGSF).