Insurance Guidelines (2016)

Summary

These are the BVI Financial Services Commission's Insurance Guidelines, issued under the Insurance Act 2008 and Insurance Regulations 2009, which came into force on 1 November 2016. They explain how the Commission will administer licensing, notification, record keeping and asset maintenance requirements for insurers, insurance agents and insurance brokers operating in or from the Virgin Islands, including the new Category E and Category F captive insurer licences introduced in 2015 amendments.

• New captive licence categories: Category E licences are for pure captives underwriting only related party business; Category F licences are for captives that may underwrite a limited amount of unrelated party business to qualify as an insurer under foreign law.
• Combined life/health and property/casualty licensing: Applicants may now apply for a single licence to carry on both life and health, and property and casualty insurance.
• Cut Through Endorsement Clause: BVI domestic insurers not rated A- or better by AM Best or a similar agency must include a Cut Through Endorsement Clause in their reinsurance contracts.
• Application requirements: Applications must use the prescribed Application Form, be properly completed with all supporting documents (business plan, five year projections, GAPR forms for auditor, insurance manager, directors and senior officers), and be accompanied by the requisite application fee before they are considered properly filed.
• Notifications and approvals: Licensees must notify or seek Commission approval for matters such as changes in directors and senior officers, acquisition or disposal of significant or controlling interests, appointment of actuaries and auditors, and amended business plans.
• Record keeping and reporting: Licensees must maintain records and submit financial statements to the Commission, with a possible extension of time available on application.
• Regulatory deposit or domestic business trust: Category A insurers (domestic business) and Category B foreign insurers not rated A- or better must maintain assets in the Virgin Islands via a domestic business trust or a regulatory deposit of $250,000 or the value of their VI liabilities, whichever is higher.
• Licensing of intermediaries: Insurance agents and insurance brokers must be licensed by the Commission and be registered BVI business companies before conducting business.

The Guidelines are explanatory in nature but reference binding requirements under the Act, the Regulations and the Financial Services (Fees) (Amendment) Regulations, 2016, and set out the practical steps and timeframes licensees and applicants must follow to remain compliant.

Key obligations

• Category E insurer applicants must give written confirmation that the Commission will be notified of changes in shareholders, directors and senior officers as soon as practicable, or at a minimum within fourteen days of the event.
• Every application for a licence must be accompanied by the requisite application fee, and the approval fee must be paid before a licence approval is considered final.
• BVI domestic insurers (and foreign insurers without an A- or better rating) must maintain a domestic business trust or a regulatory deposit with the Commission of $250,000 or the value of their Virgin Islands liabilities, whichever is higher.
• BVI domestic insurers not rated A- or better by AM Best or a similar rating agency must include a Cut Through Endorsement Clause in their reinsurance contracts.
• Insurance agents and insurance brokers must be licensed by the Commission and be registered BVI business companies before conducting insurance business in or from the Virgin Islands.
• Licensees must notify the Commission of changes in directors and senior officers, and of disposals or acquisitions of significant or controlling interests, in accordance with the notification provisions.
• Relevant licensees must appoint an auditor and, where required, an actuary, and apply for extensions of time if needed (up to an aggregate of three months for replacement actuary extensions).
• Licensees must maintain records and submit financial statements to the Commission, applying for an extension of time where necessary.
• A BVI insurer wishing to be licensed as a Segregated Portfolio Company must apply to the Commission for an SPC licence, which will be issued as a Category C licence.

Applies to

BVI insurers (Category A, B, C, E and F), foreign insurers licensed in the Virgin Islands, captive insurers, insurance agents, insurance brokers, insurance managers, segregated portfolio companies licensed as insurers

Deadlines

• 1st November, 2016: Commencement date of the Insurance Guidelines.
• within fourteen (14) days of the event: Category E insurers must notify the Commission of changes in shareholders, directors and senior officers.
• up to three (3) months aggregate: Maximum extension period the Commission may grant for appointment of a replacement actuary.