Thursday, September 7, 2006

BVI Captive insurers receive Practice Directions from Financial Services Comission

The BVI Financial Services Commission has published the new legislative acts. These are three Practice Directions that are issued under the Section 40 of the Financial Services Commission Act, 2001, and which give supplementary explanation of some terms, definitions and Commission requirements included in the Insurance Act, 1994 and Insurance (Amendment) Regulations, 2005. The documents were signed by Robin Goal, the Chairman of the Board of Commissioners of the Financial Services Commission, and officially sealed on 29 August 2006.

The Practice Direction Number 1 of 2006 - Definition of Terms – Insurance Allowable Assets gives formal definitions of the certain terms included in the Insurance (Amendment) Regulations, 2005, which expand the list of allowable assets and non-allowable assets. These terms are "high grade rating, "medium grade rating", "credit assessment institutions recognised by the Commission" and "stock exchanges recognised by the Commission". The Practice Direction includes the list of the Credit Assessment Institutions and Stock Exchanges recognised by the Commission, and represents the table of investment ratings.

The Practice Direction Number 2 of 2006 - Investment Policy for Captive Insurance Companies provides the criteria how the Commission may be ensured in the competent manner of insurer's business and prudent investment management practices. The need for satisfying the Commission that the insurer has available knowledge and expertise to carry on insurance business is provided by the Insurance Act, 1994. This Practice Direction applies to all Captive Insurers licenced under the Insurance Act, 1994, and sets out the minimum policies and procedures of prudent investment management.

The Practice Direction Number 3 of 2006 - Books and Records for Captive Insurance Companies also applies to all Captive Insurers and their insurance managers licenced under the Insurance Act, 1994. It provides guidance how they can demonstrate to the Commission that they meet the minimum requirements for maintaining books and records at the principal office of a Captive Insurer in the British Virgin Islands. The Practice Direction 3 also sets the minimum information amount that should be mantained in the insurer's principal office.
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