insurance

Who is caught

The Insurance Act (Revised 2020) is the primary statute governing insurance business carried on in or from the British Virgin Islands. It regulates who may carry on insurance business, the licence categories available, and the ongoing obligations of licensees, with detail supplied by the Insurance Regulations, the Regulatory Code and various guidelines.

• Insurers: BVI insurers and foreign insurers licensed under the Insurance Act, across licence Categories A to F (Categories E and F being pure and limited captive licences introduced by 2015 amendments), including insurers licensed as segregated portfolio companies (Category C).
• Intermediaries and support providers: Insurance managers, insurance intermediaries (insurance agents and insurance brokers), and loss adjusters (including public adjusters), together with auditors and actuaries appointed by licensees.
• Foreign insurers and Lloyd's: Foreign insurers licensed in the Virgin Islands, and Lloyd's syndicates that may be approved to write Virgin Islands business without a licence subject to conditions and quarterly reporting.
• Owners and controllers: Persons holding or acquiring a significant interest or, following the 2023 amendment, a controlling interest in a licensee or its holding company; the 2024 amendment adds prior-approval and notification duties for changes in ownership of foreign insurers.
• Segregated portfolio companies: BVI insurer segregated portfolio companies formed under the Segregated Portfolio Companies (Insurance) Regulations, 2018.

A separate regime under the Virgin Islands Deposit Insurance Act, 2016 establishes the Deposit Insurance Corporation and applies to banks and other deposit-taking institutions declared to be member institutions; that Act concerns deposit insurance rather than the insurance sector regulated under the Insurance Act. What brings a person within scope of the Insurance Act is carrying on insurance business, or acting as an insurance manager, intermediary or loss adjuster, in or from the Virgin Islands.

Sources: Insurance Guidelines (2016) · Insurance Guidelines 2016 · Virgin Islands Deposit Insurance Act, 2016 · Regulatory (Insurance Code of Conduct) Code, 2021 · Insurance Act (Revised 2020) · Insurance (Amendment) Act, 2023 · Insurance (Amendment) Act, 2024 · Insurance Regulations (Revised 2020) · Proclamation (SI 2009 No. 63): Insurance Act, 2008 Commencement · Segregated Portfolio Companies (Insurance) Regulations, 2018

Key duties

Licensees carry continuing prudential, governance, record-keeping, reporting and conduct obligations under the Insurance Act, the Insurance Regulations, the Regulatory Code and the Insurance Code of Conduct.

Licensing and financial soundness

• Licensing: Licensees must not carry on unauthorised insurance business or deal with unlicensed insurers; agents and brokers must be licensed and be registered BVI business companies before conducting business, and intermediaries must not receive commission unless properly licensed.
• Solvency and capital: Licensed insurers must maintain a financially sound condition, minimum contributed capital and a prescribed solvency margin at all times, and are restricted in distributions, loans and advances to connected persons.
• Assets in the Virgin Islands: Insurers must maintain assets in the Virgin Islands as prescribed; certain foreign insurers and domestic insurers not rated A- or better must secure Virgin Islands liabilities through a domestic business trust or a regulatory deposit of 250,000 dollars or the value of their liabilities, whichever is higher.

Governance and notifications

• Officers and control changes: Insurers and intermediaries must obtain Commission authorisation before appointing or terminating directors and senior officers, opening branches, or acquiring or disposing of significant interests; a foreign insurer must obtain prior written Commission approval before a change in significant or controlling interest and must notify lesser changes within 14 days (2024 amendment).
• Actuary and auditor: Life and health insurers must appoint a qualified actuary and obtain periodic actuarial investigations; relevant licensees must appoint an auditor and submit audited financial statements and returns to the Commission.
• Insurance manager and representative: Insurance intermediaries and managers must appoint a designated representative unless exempted, and maintain professional indemnity and other required insurance.

Records and claims

• Claims handling records: Under the Regulatory (Amendment) Code, 2021, licensed insurers must keep records evidencing the inception, handling and conclusion of each claim sufficient to create a full chronology, obtain records from any loss adjuster engaged, and give intermediaries sufficient information; intermediaries must keep records of their own claims activities.
• Books and records: Licensees must maintain proper records and prepare financial statements in accordance with the Act; captive insurers and their managers must keep prescribed books and records at the principal office in the Territory.

Conduct of business

• Pre-sale disclosure: Category A and B insurers and intermediaries must give customers sufficient pre-sale information (status, product features, costs, exclusions, rights and obligations) before entering a contract.
• Documentation: A cover note must be given at the time the contract is entered into, and full policy documentation must be provided within 45 days of entering the contract.
• Claims and complaints: Insurers and intermediaries must process claims and complaints promptly and fairly and manage conflicts of interest; loss adjusters must keep written investigation procedures and update clients at fourteen-day intervals.

Fees and periodic filings

• Annual fees: Insurance Act licensees must pay annual fees no later than 28 February each year, with renewal fees tiered by premium volume; BVI insurer segregated portfolio companies must pay their annual fee on or before 28 February.
• Domestic business trusts: A specified foreign insurer must establish a domestic business trust with a Commission-approved trustee, keep trust property at least equal to its domestic liabilities (or 250,000 dollars), submit the trust instrument within 5 days of execution, and use the approved Part 5B Deed of Trust; the trustee provides monthly asset statements and the company quarterly liability statements.
• Lloyd's returns: Lloyd's must submit a quarterly return of syndicates that insured Virgin Islands risk on or before the 28th day following each calendar quarter.
• SPC notifications: SPC insurers need prior written approval to create a portfolio, must notify terminations and reinstatements within specified periods, and notify changes to submitted information within 14 days.

Sources: Insurance Guidelines (2016) · Insurance Guidelines 2016 · FSC Approved Forms and Related Guidelines (Amendment) 2014 · Practice Direction Number 2 of 2006 · Practice Direction Number 3 of 2006 · Financial Services (Fees) (Amendment) Regulations, 2023 · Financial Services (Fees) Regulations (Revised 2020) · Regulatory (Amendment) Code, 2021 · Regulatory (Insurance Code of Conduct) Code, 2021 · Insurance Act (Revised 2020) · Insurance (Amendment) Act, 2023 · Insurance (Amendment) Act, 2024 · Insurance Regulations (Revised 2020) · Segregated Portfolio Companies (Insurance) Regulations, 2018

Exemptions and carve-outs

Relief from otherwise-applicable insurance requirements is provided mainly by the Financial Services (Miscellaneous Exemptions) Regulations and by guidelines for licensees winding down, most of which require an application to and approval by the Commission rather than operating automatically.

• Lloyd's participants: Lloyd's registered brokers, cover holders, members and syndicates are exempt from insurance intermediary approval in defined circumstances, and Lloyd's syndicates may be approved to write Virgin Islands business without a licence.
• Credit life insurers: Credit life insurers are exempt from the statutory auditor appointment requirement unless the Commission directs otherwise, and may be required to submit unaudited financial statements instead.
• Compliance officer: Captive and credit life insurers (among other categories) are exempt from appointing or seeking approval of a compliance officer, subject to a Form C declaration; other licensees may apply for a discretionary exemption for a non-refundable 100 dollar fee.
• Audited financial statements: Publicly traded licensees are exempt from seeking approval for share transfers or significant-interest acquisitions, and dormant or otherwise qualifying licensees may apply to be exempted from preparing and submitting audited financial statements.
• Run-off and liquidation: Captive insurers in run-off, and insurers in solvent or insolvent liquidation, may apply for exemption from requirements such as an auditor, audited statements, a compliance officer and prudential returns, conditional on strict ongoing filings and a prohibition on new business.
• Reinsurance: The Insurance Code of Conduct does not apply to reinsurance business.

Sources: Exemption Guidelines for Licensees in Run-off, Solvent Liquidation or Insolvent Liquidation · Financial Services (Miscellaneous Exemptions) Regulations (Revised 2020) · Regulatory (Insurance Code of Conduct) Code, 2021 · Insurance Regulations (Revised 2020)

Enforcement and penalties

Enforcement runs through offences and compliance orders under the Insurance Act, administrative penalties under specific regulations, and the Commission's general enforcement powers under the Financial Services Commission Act.

• Insurance Act offences: The Insurance Act creates offences for false or misleading statements, with associated penalties and compliance orders, and prohibits unauthorised insurance business.
• Trust obligations: Breach of key domestic business trust obligations by a specified foreign insurer is a criminal offence carrying a fine of up to 40,000 dollars on summary conviction under the Insurance Regulations.
• SPC administrative penalties: Failure to comply with several notification and name-change requirements exposes a BVI insurer segregated portfolio company (or in some cases another person) to an administrative penalty under the Financial Services (Administrative Penalties) Regulations.
• Code breaches: Contravention of the Regulatory Code or the Insurance Code of Conduct is enforceable by the Commission and can lead to directives, mandatory appointment of advisers, investigations, administrative penalties, public statements, and adverse fit-and-proper consequences.
• Deposit insurance offences: The Deposit Insurance Act creates offences, including carrying on deposit-taking business without deposit insurance and failing to provide information, with monetary penalties and recovery mechanisms.
• Public advisory warnings: The Commission issues public advisory warnings under section 4(1) of the Financial Services Commission Act naming entities carrying on, or purporting to carry on, insurance business without a licence, several of which cite failures such as not paying annual fees, not submitting annual reports, and not seeking approval to discontinue business.

Sources: Kent Capital Partners Limited - Advisory Warning No. 12 of 2013 (13 March 2013) · Team Casualty Insurance Company Limited - Advisory Warning No. 4 of 2010 (2010-08-11) · Willow Grove Life Insurance Company - Advisory Warning No. 5 of 2010 (2010-08-11) · Virgin Islands Deposit Insurance Act, 2016 · Regulatory (Insurance Code of Conduct) Code, 2021 · Regulatory Code (Revised 2020) · Insurance Act (Revised 2020) · Insurance Regulations (Revised 2020) · Segregated Portfolio Companies (Insurance) Regulations, 2018