Central Bank data is showing that some motor insurance companies are finding it difficult to maintain adequate reserves to cover potential claims, Central Bank Governor Ewart Williams has said.

Speaking on Monday during the launch of the December 2011 Financial Stability Report, Williams said the industry was faced with challenges but the bank had been meeting and had taken certain moral suasion actions to require motor vehicle insurers to strengthen claims reserves.

"There has been some improvement, but efforts need to continue to bring reserves to appropriate levels. It continues to be a thorny problem so several insurance companies are being closely monitored by the bank," he said.

He said the life insurance sector continues to show robust capital levels, higher than international standards.

Life insurance companies' statutory fund reserves also continue to show sizeable surpluses. Statutory reserves are State-regulated reserve requirements to protect against losses. Regulation of these funds has been under scrutiny since the 2009 collapse of the country's largest life insurance company, CLICO.

Williams said there was one company showing a deficit, but the bank was dealing with the matter. "It is a small company, but I cannot give out the name. Their clients are not at risk but we are taking steps pretty quickly to resolve the situation," said Williams.

"Following CLICO, and because of regulatory pressures, life insurance companies have moved to improve their asset quality. Now they have reduced exposures to related parties— and here, related parties include loans to officers and directors. They have increased holdings of fixed deposits and, importantly, have increased their holdings of government securities and corporate bonds and reduced their holding of equity (stocks).

"We are much more sensitive about statutory fund deficits...There is one important difference to how we operate now to pre-2009. Up to the end of 2008, statutory funds were monitored on an annual basis. Institutions were required to submit fund information six months after the end of the financial year."