April 8, 2003 – Residential property insurance capacity in the territory is about to increase by $15 million and construction categories have been broadened, thanks to successful negotiations between Lt. Gov. Vargrave Richards and underwriters at Lloyd's.
Richards, who promised to turn the insurance industry in the Virgin Islands around in his capacity as insurance commissioner, said this week he has approved a rate filing for underwriters at Lloyd's PWS International facility.
Along with increasing capacity, Richards said he negotiated for significant discounts for hazard mitigation measures and deductible options of 5 to 20 percent which could also decrease premiums for the higher deductibles.
There also will be credits up to 10 percent available to people who opt not to file claims for cosmetic damages such as paint or roof coating unless there also is structural damage.
In a release from his office, Richards said the filing "includes coverage for fire-resistive and masonry construction as well as mixed and frame construction." He added: "as a result, almost any homeowner would qualify for coverage under this facility."
In recent years it has been difficult, if not impossible, to obtain insurance coverage on wood-frame homes. Coverage won't be cheap, but it will be available.
David C. Ridgway, president of the V.I. Insurance Association, said in a statement faxed from his office that the association "is encouraged by the recent action of the Division of Banking and Insurance in approving this new capacity to enter the market. Additional capacity, combined with a broader choice of options, will benefit the consumer." He added: "Ultimately, market forces should drive the rates down."
In February, Richards reached an agreement with Royal & SunAlliance that prevented the carrier from ceasing business in the territory. The company was at the time the second-largest property insurance carrier in the territory, writing more than 11 percent of the coverage in the Virgin Islands, including coverage at substantial discounts to AARP members.
Deverita C. Sturdivant, director of the Division of Banking and Insurance, said she hopes to bring even more capacity to the territory by "resurrecting" some of the companies that had made filings in the past but were discouraged by their reception.
Richards' immediate predecessor, Lt. Gov. Gerard Luz James III, zealous in his efforts to protect constituents from insurance company rate increases, made few friends in the industry during his four-year term.
Richards has indicated that he wants to reverse that situation, saying he is "poised for a turnaround that will meet mutually beneficial goals for agents, facilities and consumers alike."
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