LIEUTENANT GOVERNOR VARGRAVE RICHARDS ONCE AGAIN URGES GOVERNOR TURNBULL
TO VETO ANY PROPOSALS THAT WOULD UNDERMINE THE INSURANCE GUARANTY FUND.
Lieutenant Governor Vargrave Richards wrote Governor Turnbull today
to once again insist that the integrity of Insurance Guaranty Fund be
preserved.
Richards reminds Governor Turnbull that it was just in early May that
he strongly opposed the dispensation of any appropriations from the
Insurance Guaranty Fund to meet any general obligations or otherwise.
Richards states emphatically that: "The repeated 'raids' or attempts
to 'raid' the Insurance Guaranty Fund undermines the purpose for which
it was established. To compromise the Fund places the entire Insurance
Industry at great risk should any major catastrophe occur during the
present hurricane season. Therefore, I strongly urge the Governor to
veto the authority granted in Section 23 (b) (1) of Act 6479 to permit
the use or transfer of any monies from the Insurance Guaranty Fund,
in particular the proposal of 'seeking to substitute up to $30,000,000'
from the Fund with a stand by letter of credit."
Richards reiterated, "The original intent of the Guaranty Fund
to protect policyholders in case of Industry insolvencies has been demonstrated
since 1990 through the disbursements from the Fund for insurance claims
and other related purposes. For example, in 1990, before the establishment
of the Hurricane Hugo Fund, $10,000,000 from the Guaranty Fund was utilized
to pay Hurricane Hugo claims. Subsequent such disbursements were made
over the course of the next twelve years. Another example is from September
1999 to December 2002, approximately $800,000,00 for claims and attendant
costs were disbursed from the Fund. Presently, thirty-three (33) claims
with reserves of $1, 650,000 are currently pending before the Guaranty
Association."
Lieutenant Governor Richards further shares that: " The disbursements
over the past 12 years total more than $70,000,000 in direct payments
from the Guaranty Fund for the benefit of Virgin Islands claimants and
policyholders.
As an aside, in Florida for example, it is my understanding that 9
or more companies went bankrupt. What this means, is that we must take
heed that any 'raid' on the Fund will have severe consequences on assisting
failing companies and the Insurance Industry in meeting obligations
for consumers. This is essentially a rainy day fund that should be used
for rainy days."
In conclusion Richards states that during his recent meeting at the
Conference of the Insurance Association of the Caribbean the main concern
repeatedly expressed was the use of the Guaranty Fund for other than
its main intent. Richards said: "The message was clear. If we are
to grow the Industry, in order to attract and retain insurance companies
to the Territory, the integrity of the Industry and the Fund must be
made a high priority. Potential companies must be assured that the Industry
in the Virgin Islands will do everything necessary to protect their
interests and that of the consumers."
Finally Richards stated: "To tamper with the Guaranty Fund will
show a decisive negative impact on companies wanting to relocate to
the Virgin Islands. If we are to grow the Industry for economic and
social advancement, it is imperative that we maintain the original intent
of the Fund. I strongly urge the Governor to veto any proposals before
him."
