Four bills approved in committee Wednesday would create clearer insurance company financial reserve requirements and more uniform regulation consistent with most jurisdictions and give the Division of Banking and Insurance more direct authority over online and non-V.I. financial institutions.
The bills join a string of financial regulation reforms enacted in the past few years. Two may help the territory gain accreditation from the National Association of Insurance Commissioners.
One (Bill No. 32-0248) would require all insurance companies to submit a statement of actuarial opinion on the adequacy of the insurance company’s reserves.
Banking and Insurance Division attorney Monica Williams Carbon said the division requires this now, through the licensing process, but it is not required in the insurance code or regulations. Carbon said reserves “are the amount of funds or assets on hand that are necessary at any given time to enable a company to pay all claims on insurance policies that are in effect.”
Getting a clear picture of what reserves should be both safeguards against a company going under, harming a policy holder, and against too high reserves, which could result in higher premiums.
A second bill (Bill No. 32-0309), the Standard Valuation Law of 2018, also impacts insurance reserves and meets NAIC requirements. This one sets rules for “valuation,” which officials said is the process of establishing exactly how much of its reserves are needed to makes sure a life insurance company will be able to pay its claims and meet its liabilities.
A third bill (32-0256), called the Virgin Islands Finance Lenders Law, would give the division power it does not have now to regulate non-bank loans like car loans from a dealership. It sets forth licensing and regulatory requirements for businesses seeking to make or broker consumer or commercial loans in the territory. This deals with commercial loans greater than $5,000. Banking and Insurance Division attorney Dolace McLean said the bill is “critical” primarily because many consumers in the territory purchase used automobiles and finance the cost of purchasing these vehicles through automobile dealerships.
While many have no other option due to limited cash on hand or limited credit, the Banking and Insurance Division has no licensing or regulatory authority over this type of lending and it has gotten “numerous complaints” about high interest rates and “unfair trade practices,” McLean said.
The fourth bill, the Uniform Money Services Act, would give the division authority over money-moving services like MoneyGram, Western Union, AirBnB and so on. Currently, the Division of Licensing and Consumer Affairs has regulatory power but lacks the financial expertise and resources for that task, officials testified.
All bills were approved unanimously and forwarded to the Committee on Rules and Judiciary for further consideration. Present were: Sens. Marvin Blyden (D-STT), Dwayne DeGraff (I-STT), Neville James (D-STX), Nereida Rivera-O’Reilly (D-STX), Tregenza Roach (D-STT), Brian Smith (D-At Large) and Kurt Vialet (D-STX).
