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Auditor General slams CINICO and CINICO replies

The Auditor General, Alastair Swarbrick

The Auditor General, Alastair Swarbrick, made public yesterday (23) a performance audit report on the “Management of Overseas Medical Services.” The Cayman Islands Government is currently spending approximately $30 million a year on overseas medical care. In his report, Mr. Swarbrick provided an assessment of how well the Cayman Islands National Insurance Company Ltd.(CINICO), a Cayman Islands Government owned company, is providing overseas health management services in a cost effective manner

In his audit covering the period from May 2009 through April 2011, Mr. Swarbrick found a number of significant weaknesses in the operations of CINICO including:

• CINCIO officials not attending many key weekly meetings intended to ensure the effective management of overseas cases;

• a lack of paper work to support how CINICO managed overseas cases when responsibility was taken away from the case management company ;

• engaging a second case management company in contravention of the agreement with the first company and without board knowledge;

• a lack of evidence that CINICO was ensuring the case management company was carrying out its key responsibilities under the contract to avoid overseas medical costs; and

• a lack of good governance practices in place for effective oversight by the Board of Directors.

“I found CINICO did not have sufficient management and board practices that would have ensured expenditures relating to overseas medical services were being effectively controlled,” said the Auditor General. “In several individual cases, I could not find evidence supporting decisions taken that would have ensured cost effective patient care.”

Mr Swarbrick noted that the audit did not quantify how much money might have been saved had CINICO adopted better management practices.

While he raised some serious concerns, Mr. Swarbrick said he is pleased to see the positive response of the current management team and Board through recent actions taken and a willingness to take further action to address the concerns discussed in his report.

CINICO Replies:

CINICO welcomed the audit on overseas medical services and has worked very closely with the members of the Auditor General’s Office.  We are in general agreement with the findings and recommendations. The audit was conducted during a period when the Company was without a CEO (August 2008 to December 2010).    Many  of the  issues/recommendations raised in  the audit such  as tendering  the overseas care management services, direct network contracts, updating strategic plan initiatives, etc.; have been on the Company’s agenda for quite some time (which predated the current management team and board).  However, the departure of the CEO in 2008 delayed the development and implementation of many of the issues/recommendations falling within the present audit recommendations.  Under the new CEO who started in December of 2010, many of the auditor general’s recommendations had already begun to be implemented by the present management of the Company prior to the release of this report.

While we do recognise the areas needed for improvement, we would like to point out that: First, despite the challenges faced by the above conditions, practices were in place that managed medical services rendered, however they were not documented properly in a manner that would allow for a comprehensive review.  Second, a majority of the insurance premium is driven by claims paid, and considering that our premium rates are very low (despite 100% benefit coverage on most of our member plans); this would indicate that there are successes in keeping overall claim costs manageable.  Furthermore, the Company recorded net income of $5,809,106 and $3,509,939 for the fiscal years 2008/9 and 2009/10 respectively.

CINICO’s management and the board have already implemented changes to address some of the recommendations/findings, and are diligently working on addressing the remaining issues raised.



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