Finance Committee Advances Bill to Update Insurance Laws

Lawmakers voted unanimously in favor of Bill No. 34-0191, sponsored by Senate President Donna Frett-Gregory at the request of the governor. The bill seeks to strike all instances of the term “international insurer” cited in Chapter 55, Title 22 of the VI Code and replace it with the term “captive insurer.”

The bill would further define a “captive insurer” in the VI Code as “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 wholly owned 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.”

While the Virgin Islands uses the terms “international insurer” and “captive insurer” interchangeably, other jurisdictions may recognize their own legal definition of those terms. This confusion raised concern from the National Association of Insurance Commissioners (NAIC), a leading organization responsible for coordinating compliance with regulatory standards across the 50 states and five territories.

Failure to apply these standards under the VI Code would potentially cause the USVI to lose its accreditation with the NAIC, according to testimony from Glendina P. Matthew, the interim Director of the Division of Banking, Insurance and Financial Regulation within the Office of the Lieutenant Governor.

“With these safeguards in place, the measure will strengthen the regulatory oversight of the Division of Banking and Insurance over the captive insurance program,” said Sen. Frett-Gregory during her introduction of Bill No. 34-0191, “and secure reaccreditation of the Division of Banking and Insurance.”

Following the testimony from interim-Director Matthew, senators swiftly clarified any lingering questions.

Senator Dwayne DeGraff asked the testifiers in attendance how the implementation of Bill No. 34-0191 would affect current insurers in the market.

“There isn’t any impact,” said interim-Director Matthew. “This bill doesn’t in any way impact companies that are currently licensed. It is just a matter of changing the name that we traditionally use in the code, which says international insurers.”

In response to questioning from Senator Samuel Carrión, interim-Director Matthew noted that two “captive insurance companies” currently operate within the Territory.

“I think this is a good proposed legislation,” said Sen. Carrión. “Because what you’re doing is clearing up the language within our codes, which is necessary. It’s something we’re seeing that we need to do more and more.”

Support continued to echo across the session with Senator Javan E. James.

“I guess we’re being proactive,” said Sen. James with a smile. “So thank you.” After a brief pause, Sen. James assured the testifiers in a moment of jest: “That’s a compliment,” he chuckled. “You should be happy about it.”

After a shared laugh, Sen. James offered his support of the legislation and noted the importance of the Territory maintaining its accreditation with NAIC.

“It speaks to high standards,” said Sen. James.

With its favorable vote from the 34th Legislature’s Committee on Finance, Bill No. 34-0191 will proceed to the Committee on Rules and Judiciary for further vetting.