Feb. 7, 2006 – Insurance agents and brokers who countersign policies written by off-island brokers are going to have fewer dollars in their pockets, as will the V.I. government and the Insurance Guarantee Fund, if a bill sent for consideration to the Senate is passed.
Gov. Charles W. Turnbull submitted a bill in January that would lift the countersignature requirement – a move that has already been adopted in at least 13 states, one insurance professional said.
But Jim Tunick, president of Theodore Tunick Co., said it's not so much about the money local brokers receive for countersigning policies written by non-resident agents or about the money that goes to the treasury and the guarantee fund. What has Tunick concerned is the competition local brokers could face from large stateside brokers.
He's also not happy that the government is not supporting its local business people.
"I had hoped the government would be protective of the local industry," Tunick said. Between his offices on St. Thomas and St. Croix, Tunick said he employs 60 people. And there are at least 100 more working in the insurance industry in the Virgin Islands, he said.
But Deverita Sturdivant, director of the Division of Banking and Insurance, said, "the handwriting was on the wall" with most other jurisdictions capitulating after countersignature laws were struck down in court. "They were found to be unconstitutional," she said. With a lawsuit currently pending in the U.S. District Court to force the territory to change the law, Sturdivant said, "We're being proactive."
Warner Bowers, president of the V.I. Insurance Association, said, "Who's going to lose are the agents who were countersigning the policies." He also said the government loses the 4 percent gross receipts tax and the 5 percent premium tax paid on the money earned by local agents who countersign policies. The premium tax supports the Insurance Guarantee Fund, which was put in place to offer financial assistance in the event that an insurance company goes belly up and can't pay its claims. The fund has a $50 million cap, Sturdivant said. The fund is currently at its cap, she said, so additional money goes to the General Fund.
Sturdivant said her office had to be "vigilant" where the premium taxes were concerned anyway to make sure they were being paid. She said the change in the law should not significantly affect her office financially. "This office has always had to be vigilant to make sure the premium taxes were being paid. We are simply moving toward the national trend," she said.
The bill will first be considered by the Finance Committee and then Rules before going to the full Senate for passage, according to James Francis, chief of staff to Senate President Lorraine Berry.
Tunick said he hoped to "convince our senators that this [bill] is not in the best interest of Virgin Islanders."
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