Senate committee OKs bill directing captive insurance funds to V.I. hospitals
Published: April 2, 2014
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ST. THOMAS - The Senate Finance Committee passed a bill Tuesday to funnel a new revenue stream to the territory's hospitals, but no one knows yet how much money that might be.
The bill, sponsored by Sen. Tregenza Roach, will take all revenue generated by captive insurance companies doing business in the territory and, after administrative expenses are deducted, give the money to the hospitals.
"We do not yet know what the revenue stream will be from the captive insurance legislation," V.I. Finance Commissioner Angel Dawson Jr. said. "While it is commendable that we would be looking at new revenue streams, I just caution that this is not a panacea."
Captive insurance is insurance or reinsurance provided by a company that primarily covers the assets and risks of its parent company or companies.
Captive insurance essentially is an in-house insurance company with a limited purpose and is not available to the general public. It is an alternative form of risk management, through which a company can protect itself financially while having more control over how it is insured.
The Exempt International Companies Act, enacted in 1984, first allowed the captive insurance industry into the territory.
In December, Gov. John deJongh Jr. signed a bill into law that creates the Division of Alternative Markets and International Reinsurance and establishes a new position, the superintendent of alternative markets. The new division is located under the Lt. Governor's Office.
Under the proposed legislation, a captive insurance company would have to pay the V.I. government a $5,000 application fee and a licensing fee ranging from $2,000 to $10,000, all of which would go straight into the government's coffers.
If Roach's bill is successful, that money would help cover the cost of uncompensated care at Luis and Schneider hospitals.
The money would be split evenly between the two facilities.
Hospital officials testified in support of the bill Tuesday, even though it is unknown what impact the measure might have on the institutions.
The Senate Finance Committee unanimously passed the bill, which now will be forwarded to the Rules and Judiciary Committee.
- Contact reporter Aldeth Lewin at 714-9111 or email email@example.com.