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Tuesday, July 5, 2022
HomeNewsArchivesMISUSE OF GUARANTY FUND COULD HURT V.I

MISUSE OF GUARANTY FUND COULD HURT V.I

The Legislature’s decision to use up to $30 million from the Insurance Guaranty Fund to meet government obligations will hurt Virgin Islanders. Aside from the obvious risk created for policyholders in the Virgin Islands (we have just entered the second month of the hurricane season), this action sends a damaging message to all property and casualty insurers active in the Territory and, as importantly, to those insurers that may be considering entering or re-entering the Territory. The Insurance Guaranty Fund was set up to protect policyholders in case of failure of a licensed property and casualty insurer. The fund has unfortunately been called on many times in the last 14 years. Insurers view the repeated raids on the guaranty fund to meet various ongoing government obligations as irresponsible government. The solution to both the shortage and the high price of property and casualty insurance in the U. S. Virgin Islands is to attract more providers. This latest raid will surely worsen the territory’s insurance problems.
The members of the Virgin Islands Insurance Association were very pleased to see Lt. Governor Vargrave Richards and Deverita Sturdivant, the director of the Division of Banking and Insurance at the recent annual conference of the Insurance Association of the Caribbean.
Delegates from throughout the region along with underwriters and brokers from all over the world met in Punta Cana, Dominican Republic June 9 – 11. The lieutenant. governor and the director made themselves available for several meetings with present and potential insurers to see what could be done to encourage them to make more insurance available in the territory. A common message that was delivered by many insurers was a concern over unpredictable government actions, including specifically the repeated raids on the Insurance Guaranty Fund. Representatives of several syndicates at Lloyd’s, some of which had stopped writing in the U. S. Virgin Islands over the last couple of years, were the most vocal about these issues.
The involvement of the lieutenant governor and the director of Banking and Insurance in the recent conference and their positive message to many insurers represented a new beginning in relations between insurers and the Virgin Islands insurance market. Meetings were positive and encouraging. Unfortunately, the very next week, the Legislature passed an amendment allowing the government to tap the Insurance Guaranty Fund for up to $30 million.
The members of the Virgin Islands Insurance Association work very hard to attract additional insurers to this territory. Unfortunately, many local agents and brokers experience difficulty attracting new insurers to the territory. Among the reasons cited time and time again by these insurers is actions such as raids on the Insurance Guaranty Fund. The Virgin Islands Insurance Association encourages Gov. Turnbull to veto the amendment allowing the use of the Insurance Guaranty Fund for purposes other than those for which it is intended.

David C. Ridgway
President
Virgin Islands Insurance Association

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