Date: September 27, 2004
Contact: Angela Johnson
Phone: 773-6449
ACTING GOVERNOR VARGRAVE RICHARDS WARNS SENATE NOT TO RAID THE TERRITORY'S
INSURANCE GUARANTY FUND
Acting Governor Vargrave Richards, the V.I. Commissioner of Insurance,
again warns the Senate of potentially dire consequences if the legislators
carry out their proposed raid on the Territory's Insurance Guaranty
Fund.
Pointing to the widespread destruction in several sister islands, and
the repeated lashings Florida received recently, the Acting Governor
urged the 25th Legislature to leave the Guaranty Fund intact for the
sake of the Territory's future. He stressed the crucial fact that insurance
carriers who will be called upon to pay claims in these jurisdictions
also provide property and windstorm insurance in the U.S. Virgin Islands.
"While it is not my intent to create undue alarm, one must question
the ability of any insurance company to sustain multiple catastrophic
losses that may occur in a matter of weeks," Acting Governor Richards
wrote in a Sept. 27th letter to Senate President David Jones. "Exacerbating
this circumstance is the fact that we are experiencing a phenomenally
active hurricane season."
The Acting Governor has underscored in previous correspondence to the
Legislature that the Guaranty Fund was established for a single purpose
- to provide the Territory's insurance consumers with financial compensation
in the event of an insurer's insolvency.
"If a catastrophic hurricane were to trigger an insurance insolvency,
the approximately $50 million currently in the Guaranty Fund would be
grossly inadequate to compensate Virgin Islands policyholders for their
actual property losses," Acting Governor Richards said. "To
use an old colloquial saying, any reduction in this fund amounts to
the Territory cutting off its nose to spite its face. It is therefore
expected that the Legislature will engage in sage and prudent decision
making, and resist the urge to mount another ill-conceived raid on the
Guaranty Fund."
