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HomeNewsArchivesLT. GOV.: INSURANCE FIRMS CAN'T CANCEL POLICIES

LT. GOV.: INSURANCE FIRMS CAN'T CANCEL POLICIES

Dec. 23, 2001 – Lt. Gov. Gerard Luz James II has ratcheted up the running squabble between his insurance division and the territory's insurance industry by slapping an unannounced moratorium on companies to stop them from canceling customers' property policies.
James, who also acts as the territory's Insurance commissioner, announced his order in a release late Thursday. He said it was prompted by "threats" from unidentified insurance companies informing him that they would not renew or would stop altogether writing property insurance policies unless the Banking and Insurance Division allows rate increases.
"The cancellation or non-renewal of property of [sic] insurance policies as announced by certain insurers will pose a significant danger to insurance consumers and will destabilize the insurance market," James said. "Insurance companies while doing business in the territory, have an obligation to preserve the integrity of insurance and the insurance markets, and to contribute to an orderly market for property insurance."
James's move caps a year of clashes between Banking and Insurance officials and the V.I. Insurance Association. At issue are the opinion held by James and others that the cost of insurance in the territory is too high; the mutually agreed-upon fact that there is a dearth of new insurers in the territory and a lack of insurance capacity; and the Insurance Association's view that the failure of James's office to grant legitimate rate increases has kept new companies from doing business here.
In a statement issued Friday, the Insurance Association said it didn't know about the moratorium order until after James's press release was circulated to the media. The statement called James's move "political."
"The Virgin Islands Insurance Association has yet to see the actual order," the organization's statement said. "Our members were disappointed to learn of this order through a call from a reporter as opposed to receipt of the actual order or notice of it from the lieutenant governor.
"The association and its members are concerned about adverse effects this order will likely have on the availability of insurance to all property owners in the territory," it said. "We trust the political nature of this action is as obvious to the public as it is to our members."
James said the order will not apply if a company can prove that a cancellation or non-renewal is necessary for it or its reinsurer — a company such as Lloyd's of London that insures or underwrites insurance companies — to avoid "unreasonable risk or insolvency."
A company seeking an exception to the order must apply for and obtain a separate written order before it can cancel a policy, James said. The order will be in effect until June 30, 2002, unless it is terminated earlier or extended.
James said he will hold a "hearing" at 10 a.m. Jan. 29 in his office on St. Thomas at which insurance companies can show cause why the order should not remain in effect.

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Dec. 23, 2001 – Lt. Gov. Gerard Luz James II has ratcheted up the running squabble between his insurance division and the territory's insurance industry by slapping an unannounced moratorium on companies to stop them from canceling customers' property policies.
James, who also acts as the territory's Insurance commissioner, announced his order in a release late Thursday. He said it was prompted by "threats" from unidentified insurance companies informing him that they would not renew or would stop altogether writing property insurance policies unless the Banking and Insurance Division allows rate increases.
"The cancellation or non-renewal of property of [sic] insurance policies as announced by certain insurers will pose a significant danger to insurance consumers and will destabilize the insurance market," James said. "Insurance companies while doing business in the territory, have an obligation to preserve the integrity of insurance and the insurance markets, and to contribute to an orderly market for property insurance."
James's move caps a year of clashes between Banking and Insurance officials and the V.I. Insurance Association. At issue are the opinion held by James and others that the cost of insurance in the territory is too high; the mutually agreed-upon fact that there is a dearth of new insurers in the territory and a lack of insurance capacity; and the Insurance Association's view that the failure of James's office to grant legitimate rate increases has kept new companies from doing business here.
In a statement issued Friday, the Insurance Association said it didn't know about the moratorium order until after James's press release was circulated to the media. The statement called James's move "political."
"The Virgin Islands Insurance Association has yet to see the actual order," the organization's statement said. "Our members were disappointed to learn of this order through a call from a reporter as opposed to receipt of the actual order or notice of it from the lieutenant governor.
"The association and its members are concerned about adverse effects this order will likely have on the availability of insurance to all property owners in the territory," it said. "We trust the political nature of this action is as obvious to the public as it is to our members."
James said the order will not apply if a company can prove that a cancellation or non-renewal is necessary for it or its reinsurer -- a company such as Lloyd's of London that insures or underwrites insurance companies -- to avoid "unreasonable risk or insolvency."
A company seeking an exception to the order must apply for and obtain a separate written order before it can cancel a policy, James said. The order will be in effect until June 30, 2002, unless it is terminated earlier or extended.
James said he will hold a "hearing" at 10 a.m. Jan. 29 in his office on St. Thomas at which insurance companies can show cause why the order should not remain in effect.