Saturday, November 17, 2007

BVI Insurance Association looking for ways to rescue BVI domestic insurance business

The BVI Insurance Association that was recently formed to work in the domestic insurance sector, is to deal with many issues affecting the industry and to address many challenges, some of them even threatening functioning of the sector.

The President of the BVI Insurance Association and the Managing Director of NAGICO Insurance Company Shan Mohamed has told about the main problems of onshore insurance industry. He said that members of the Association would need to come together and agree to work with certain parameters, to ensure that the industry remains strong, and customers' interests are respected and protected. The President of the Association expressed concern over too large number of accidents in the BVI, and said the association will lobby to Government to address this issue.

An important point made by Mohamed is that the association was formed to protect the domestic insurance industry in the BVI, because financial institutions, for example banks, are seeking to enter the property insurance market, and their number may be critical to other companies, particularly medium and small insurance agents. By his words, this becomes common practice in developed countries, and the current situation should be evaluated by the BVI FSC and other Government bodies responsible for the approval of new licenses.

After saying a few words about the problems of onshore insurance business in BVI, we should note that BVI offshore insurance business is sound and perfect. Offshore insurance business in BVI is another good example how offshore jurisdiction can improve the quality of offshore financial services. Industry professionals should remember how in early 90s there were couple thousand captive insurance companies registered on the BVI. Most of them were shell captives, some were related to grey business, and even money laundering. By introducing stringent requirements to minimum capital, due diligence and other measures, the number of licences was reduced to several hundreds, but BVI dramatically improved the quality of BVI-licensed captive insurers.

Parent companies for most BVI-licensed captives are located in the U.S. However, the offshore territory is of global importance, being the basic jurisdiction for captives from such countries as Switzerland, Guernsey, Taiwan, South America and the Middle East.

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