By NEIL HARTNELL Tribune Business Editor THE outgoing Bahamas Insurance Brokers Association's (BIBA) president has again complained that ties between commercial banks and large brokers are "cutting everyone else out" of the homeowners insurance market, with such arrangements proving "unfair" to consumers. Vaughn Culmer, head of Vaughn Culmer & Associates, whose term as BIBA head expires at year-end, said that apart from being anti-competitive and anti-consumer choice, banks were not replacing 'like with like' when they placed mortgage clients on their group homeowners policies. Explaining that Bahamas-based commercial banks were being imposing "strict requirements" on their borrowers, namely that they provide proof insurance premiums had been paid by the renewal date or otherwise be placed on the bank's group policy, Mr Culmer said homeowners often insured their property and its contents together. Yet the bank's group policy, he argued, only insured the property, forcing homeowners to subsequently pay more to take out separate contents insurance policies. "We're looking to collaborate on the bank issues," Mr Culmer said of BIBA's plans going forward. "Where the banks have insurance licences, they are beginning to corner the market as far as homeowners insurance is concerned. "They are going into partnership with some of the larger brokers, and cutting out everyone else. They're imposing strict requirements, show us the policy is renewed on the renewal date, and if not they're putting you on their group insurance." The group homeowners insurance arrangement between Scotiabank and Island Heritage, which operates through the latter's Bahamian agent, BISX-listed J. S. Johnson, has come in for particular concern and criticism from BIBA members, who are largely smaller agents and brokers. A number have already lost clients to Scotiabank's group policy. "Our primary concern is also that the bankers don't know insurance, and can't advise mortgage clients. And with their blanket coverage, they're not covering the contents," Mr Culmer told Tribune Business. "It's unfair to the client because the coverage is not similar." Few, though, would deny that Bahamian commercial banks have a right to protect their own credit risk exposures. If a client fails to renew their homeowners insurance, and the relevant dwelling is destroyed in a hurricane, fire or flood, it is not just themselves but the bank that is effectively on the hook, as it has no way to redeem its loan - and the security for that loan. Kevin Teslyk, Scotiabank (Bahamas) managing director, explained in a recent interview that the bank's group homeowners insurance policy with Island Heritage was designed to protect both itself and its mortgage clients, securing their respective financial futures. Arguing that it would be too costly, time consuming and administratively difficult to pay premiums to multiple brokers on behalf of Scotiabank's mortgage clients, Mr Teslyk said the group policy with Island Heritage was designed to be both "seamless and efficient" for banks and consumers alike. "We're mitigating the collective customer risk and the bank's risk," Mr Teslyk added. BIBA's Mr Culmer, though, remains unconvinced. Arguing that Scotiabank was not sticking to the protocol that the two parties had worked out over the operation of the bank's group policy, he said the brokers would meet Mr Teslyk in the New Year "to clean that up and make them follow the letter of the agreement we made". And Mr Culmer said BIBA was also discussing through the Insurance Advisory Committee, the body that advises the Insurance Commission on industry developments, whether banks should have insurance licences. "I don't have a banking licence. Why give them insurance licences? We'll be discussing that in the New Year," Mr Culmer added. He told Tribune Business that there were "still a number of issues that we're going to challenge" with regard to the new Insurance Act. These include the minimum $50,000 capital requirement for brokers and agents, and the annual audit requirement imposed on brokers. Mr Culmer said BIBA was still continuing to push the notion that brokers generating less than $250,000 in per annum turnover be subjected to an audit review, rather than a full audit. "A full audit is pretty expensive. Depending on how long the accountant has to stay in the office, it could range anywhere from $7,000 upwards," he told Tribune Business. "That's a pretty penny." An audit review, though, where an accountant just checked paperwork and that correct procedures were being followed, was just $1,500-$2,000.