June 2, 2001 – As of June 30 Scotiabank will no longer be able to arrange forced place insurance coverage for V.I. homeowners with mortgages at the bank.
In a letter from bank vice-president Robert Haines to homeowners with loans through the bank, Haines said, "circumstances beyond our control have now made it impossible for Scotiabank" to arrange insurance coverage. "You are hereby notified that you must arrange for your own insurance coverage."
The letter goes on to say, "Failure to do so will result in a default under…your mortgage and Scotiabank reserves the right to exercise any remedy available under Virgin Islands law."
The forced place program covers only the bank's interest in the property, not the owner's equity, according to Jim Tunick, insurance agent for New Hampshire Insurance Co., Scotiabank's forced place carrier, and president of Tunick Insurance. The coverage is less expensive because of that and also because it offers no liability or contents coverage like a normal homeowner's policy.
Scotiabank's action underscores what many are calling an insurance crisis in the Virgin Islands.
"In the past people could go out and arrange for other coverage, but now when they call an agent they are going to be told, 'There is no capacity.'" Tunick said.
Earlier this year reports of insurance companies reaching capacity circulated, but Lt. Gov. Gerard Luz James II, who in his capacity as lieutenant governor automatically serves as insurance commissioner, said in March that his office was working on a plan to attract more carriers. In fact, he said, carriers were approaching him and at least seven new ones had been approved.
However, Lloyds of London still has "up to 60 percent" of the market share, according to an industry source, "and that doesn't include what they re-insure." It could be as high as 85 percent.
In early May James refused to meet with a Lloyds official who was in the territory, according to several insurance sources. "It was a significant snub," one person said.
However, another industry representative said James did meet Thursday with several insurance people, including Dave Ridgway, Sandra Harty, Lance Chardon, John Harper and Manhar Desai, plus two Lloyd's underwriters who were in the territory from London, one Lloyd's London broker, Warner Bowers of Guardian and attorney Henry Feuerzeig, Lloyd's representative in the territory.
He also had dinner Wednesday night with three representatives of another major London Lloyd's broker and one of the Lloyd's U.S.V.I. agents who writes for Lloyd's through that broker.
Meanwhile, a rate filing for an increase has been pending with the Lieutenant Governor's Office "for months," Tunick said. "If they get it, the policies will be issued."
"The banks, not just Scotia, have been looking at every possibility to try to obtain insurance," he added. If they don't find it, Tunick said many home mortgages will be in jeopardy.
"I'm not a banker, but I know they have no option," he said. "They [banks] can't elect to continue with mortgages that are unprotected."
And, he added, "I hate to see Virgin Islanders become the victim of politics."
James could not be reached Saturday morning for comment.
Click on links below for previous stories on the insurance problems in the territory.
"Insurance industry to air concerns with James"
"James reassures insurance companies"


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