Captive Insurance Bill No. 27-0203, became Act No. 7025, on 11 October 2008, and the new law will be officially effective on 15 January 2009.
The Act repeals the existing Title 22, Chapter 55, and replaces it with Title 22, Chapter 54, which sets the stage for a new statutory scheme for both captive insurers and reinsurers.
The Governor, in signing the bill, stated that before the new law can become fully effective, detailed regulations to implement the 74-page Act will have to be drafted and approved. A new Superintendent of Alternative Markets (SAM), who will be responsible for supervising the alternative market and captive insurance business to be carried on in the Territory, will have to be recruited and brought on board to implement the programme. He is also expected to be responsible for overseeing the drafting of the additional regulation required for implementation.
The Governor stated that amendments to the Act must also be adopted by the Legislature, ensuring that the existing contractual obligations of the only two currently licensed captive insurers in the USVI under existing law are not impaired. The impact to Lloyd’s (the largest insurance provider in the territory) at this point in time is
unclear and will largely depend on what the regulatory framework will encompass.
Under the new law, provision is made for an “international reinsurer”, which means a company that reinsures an insurance company, including a domestic Virgin Islands company, and that may also write excess insurance over both self-insured and primary insured risks in any domicile outside of the Virgin Islands with a plan approved
by the SAM. The Act also provides for special purpose financial captives (SPFCs).
To attract captive insurance companies, captive reinsurers, alternative market entities, international reinsurers and SPFCs to the Virgin Islands, the SAM is also authorised to issue tax incentive benefits.
