British Virgin Islands insurance legislation overhauled

The British Virgin Islands has gazetted the Virgin Islands Insurance (Amendment) Act 2015 and the Insurance Amendment Regulations 2015.

These acts have been introduced to modernise the provision of insurance business in and from within the British Virgin Islands. There are some significant changes which will open up new opportunities and improve functionality for both captives and insurance companies.

The positive innovations for captive and insurance companies under the Virgin Islands Insurance (Amendment) Act 2015 include:

  • Insurers can undertake both long term and general insurance business

The current restrictions on and segregation of general insurance business and long term insurance business have been radically overhauled. These definitions have been deleted and replaced by the classes of business, life and health insurance and property and casualty insurance. Significantly the Act now allows a licensee to carry out both classes whereas previously there was a prohibition on carrying out both long term and general business.

  • New categories of captive licences

The legislation also provides for two new categories of captive licences.The first is a category E licence which may only be issued to a British Virgin Islands business company and entitles the licensee to underwrite related party business only. The second is a category F licence also issued only to a British Virgin Islands business company that writes related party business and also third party business.These two new categories should provide greater flexibility and opportunities for carrying out captive insurance business from within the Territory.

The Act simplifies the process for enabling an insurer to add or remove a class of insurance from their licence.

  • Segregated Portfolio Companies

The Act enables British Virgin Islands insurers to submit an application to be licenced as a segregated portfolio company (SPC). The key feature of the SPC is that the assets and liabilities of each cell are statutorily "ring-fenced" from the assets and liabilities of all other cells of the SPC. It is this ring-fencing which makes the SPC ideally suited for captive insurers with multiple programs and in particular where programs are offered to more than one insured.

  • Regulatory Deposit

The Insurance Amendment Regulations 2015 permit a licenced foreign insurer to opt for a regulatory deposit held by the Commission as an alternative to setting up a domestic business trust.

Other features of the acts introduce general obligations on insurers to represent the best interests of the British Virgin Islands and policy holders and not engage in any activities that might mislead customers. The provisions further solidify the British Virgin Islands as a reputable jurisdiction in which to undertake insurance business and demonstrate the continued efforts of the regulator to innovate and streamline for the benefit of licensees whilst protecting consumers.