A bill seeking to clarify the authorisation of licensing and regulating captive insurers to ensure compliance with the National Association of Insurance Commissioners’ (NAIC) accreditation standards has been passed onto the senate of the US Virgin Islands.
Sponsored by Senator Donna Frett-Gregory, Bill 34-0191 proposes an act to amend chapters of the Virgin Islands Code relating to captive insurance, specifically to clarify the purpose of the relevant chapter.
The amendments also seek to prohibit the formation of a special category of multi-state insurers that would not be required to comply with NAIC’s accreditation standards.
The US Virgin Islands’ Division of Banking, Insurance and Financial Regulation received such accreditation in December 2019, which is designed to develop and maintain baseline standards to promote effective insurance company financial solvency regulation.
The bill states that title 22, chapter 55 — currently referred to as the Virgin Islands International Insurers Act — is not indicative of the purpose of the chapter, which is to license and regulate captive insurers only, not international insurers.
Under chapter 55, an international insurer is only permitted, as a captive insurer, to write insurance business for its parents and affiliates.
To ensure full compliance with NAIC’s accreditation standards, and to ensure that entities seeking to conduct captive insurance business are conforming fully with the territory’s laws by not conducting business as a multi-state insurer or international insurer, the bill proposes changing the name of the chapter to the Virgin Islands Captive Insurers Act.
Among other lexical changes in the chapter, the bill proposes to amend Section 1401 of the code with the following definition: ““Captive insurer” means an insurance company created and wholly-owned by one or more non-insurance companies to insure the risks of its owner or parent corporation, essentially a form of self-insurance whereby the insurer is owned wholly by the insured and typically established to meet the risk-management needs of its owners or members and whose primary jurisdiction is known as its domicile.”
“A captive insurance company includes any single-parent, association, industrial insured or branch exempt captive thereof licensed under this chapter to underwrite risks situated exclusively outside the Virgin Islands.”
In addition, the bill would see an explicit written clarification of the purposes of the chapter: to allow for the statutory organisation of captive insurance companies as defined in the chapter; to prohibit international insurers from licensure under the chapter; and to prohibit captive insurers from converting into, or being licensed, as a multi-state insurer in the Virgin Islands.
