Insurance Regulations (Revised 2020)

Summary

These are the Insurance Regulations made under the BVI Insurance Act, consolidated to 1 January 2020. They set out detailed rules supplementing the Act, covering classification of insurance business, residency tests for determining Virgin Islands risk, approval of Lloyd's syndicates to write business without a licence, the registers and public records the Commission must keep, and a detailed regime for domestic business trusts and regulatory deposits used by certain foreign insurers to secure their Virgin Islands liabilities.

• Classes of business: Specifies the classes of property and casualty insurance business (Part A) and life and health insurance business (Part B) referenced in the Act.
• Residency rules: Sets tests for when individuals, BVI business companies, partnerships and foreign companies are treated as resident in the Virgin Islands, and when a risk is treated as located inside or outside the Virgin Islands.
• Lloyd's approval: Allows Lloyd's to apply for approval for its syndicates to carry on insurance business in the Virgin Islands without a licence, subject to conditions and possible revocation, and requires quarterly reporting by Lloyd's to the Commission.
• Registers and public records: Prescribes the information the Commission must maintain in its licensee registers and identifies audited financial statements of category A and category B insurers as public records.
• Domestic business trusts: Requires specified foreign insurers (category B licensees without strong financial strength ratings) to establish a trust holding approved assets at least equal to their domestic liabilities (or a $250,000 minimum), sets duties of the approved trustee, Commission powers to terminate or intervene in the trust, and court powers to appoint a trustee.
• Approved assets: Defines which asset types (cash, government and bank bonds, standby letters of credit, Commission-approved assets) qualify as approved assets for a domestic business trust and up to what percentage of domestic liabilities.
• Regulatory deposits: Provides an alternative regulatory deposit mechanism, covering application, payment, use and termination of the deposit.

Breach of key trust obligations by a specified foreign insurer is a criminal offence carrying a fine of up to $40,000 on summary conviction.

Key obligations

• A specified foreign insurer must establish a domestic business trust by written trust instrument in the approved form, with a single Commission-approved trustee holding a Class I, Class II or Restricted Class II trust licence.
• A specified foreign insurer must transfer approved assets to the trustee and ensure the value of trust property is at all times at least equal to its domestic liabilities, or $250,000 if liabilities are lower (unless the Commission directs a lesser amount).
• A copy of the domestic business trust instrument must be submitted to the Commission within 5 days of its execution.
• Lloyd's must submit to the Commission, on or before the 28th day following the last day of each calendar quarter, a return listing each Lloyd's syndicate that has insured a Virgin Islands risk or carried on insurance business in the Virgin Islands in that quarter, plus any other information the Commission requires.
• An application by Lloyd's for approval of its syndicates to carry on business without a licence must be accompanied by a list of syndicates that insured a Virgin Islands risk or carried on insurance business in the Virgin Islands in the 12 months before the application.
• Lloyd's must provide further information about its syndicates' Virgin Islands business when the Commission gives written notice requiring it.

Applies to

insurers, specified foreign insurers (category B licensees), Lloyd's members and syndicates, licensed insurance managers, licensed insurance intermediaries, licensed foreign insurers, trustees (Class I, Class II or Restricted Class II trust licensees), service providers

Deadlines

• within 5 days of its execution: A copy of the domestic business trust instrument must be submitted to the Commission.
• on or before the 28th day following the last day of each calendar quarter: Lloyd's must submit a return to the Commission listing syndicates that insured a Virgin Islands risk or carried on Virgin Islands insurance business in the previous quarter.