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COMMITTEE ON BUDGET, APPROPRIATIONS AND FINANCE BILL NO. 36-0184 Thirty-Sixth Legislature of the Virgin Islands September 10, 2025 An act amending title 22 Virgin Islands Code, chapter 14, The Virgin Islands Insurance Holding Company System Regulatory Act to implement revisions that were made to the National Association of Insurance Commissioners PROPOSED BY: Senators Milton E. Potter, and Novelle E. Francis, Jr. by Request of the Governor WHEREAS, it is imperative that all United States jurisdictions, including the Virgin 1 Islands, periodically update their insurance laws commensurate with the ever-evolving 2 insurance industry to strengthen the solvency regulation of insurance companies doing business 3 in the United States; and 4 WHEREAS, the National Association of Insurance Commissioners (“NAIC”) is a 5 nonprofit organization comprised of all insurance regulators in the United States, has 6 established and continues to establish core accreditation standards and a comprehensive set of 7 laws, known as Model Laws and Regulations, to assist United States jurisdictions in their 8 regulation of their multi-state domestic insurance industry; 9 2 WHEREAS, jurisdictions in the United States that are accredited by the NAIC have been 1 required to adopt, and to continue to adopt, NAIC Model Laws and Regulations, to achieve and 2 maintain accreditation status with the NAIC; 3 WHEREAS, on December 6, 2019, the Virgin Islands, through the Office of the 4 Lieutenant Governor, Division of Banking, Insurance and Financial Regulation (“Division”), 5 was unanimously accredited by the NAIC and on November 16, 2024, was unanimously re- 6 accredited by the NAIC, an achievement of immeasurable significance, which requires the 7 Virgin Islands to enact certain NAIC Model Laws, and to promulgate related NAIC regulations, 8 to maintain its accreditation status; 9 WHEREAS, on July 20, 2017, Act No. 8003, also known as “The Virgin Islands 10 Insurance Holding Company System Regulatory Act”, which is an NAIC Model Law, was 11 signed into law, and was later codified as title 22 Virgin Islands Code, chapter 14; 12 WHEREAS, in 2020 and 2021, the NAIC revised provisions of the Insurance Holding 13 Company System Regulatory Act Model Law, to include provisions that are related to a group 14 capital calculation, liquidity stress test and receivership; 15 WHEREAS, as of February 21, 2025, the provisions that are related to the group capital 16 calculation and liquidity stress test have been adopted as amendments to law in 35 United States 17 jurisdictions, and are currently under consideration in another 10 United States jurisdictions, 18 and the provisions that are related to receivership have been adopted as amendments to law in 19 19 United States jurisdictions, and are currently under consideration in another seven United 20 States jurisdictions; 21 WHEREAS, the amendments to the NAIC’s Insurance Holding Company System 22 Regulatory Act Model Law include provisions that are an NAIC accreditation requirement, and 23 3 as such, the Virgin Islands, as an NAIC accredited jurisdiction, must adopt these provisions for 1 the Virgin Islands to maintain its NAIC accreditation; and 2 WHEREAS, the revisions to the NAIC’s Insurance Holding Company System 3 Regulatory Act Model Law will: 4 (1) enhance the supervision of an insurance group; 5 (2) provide key financial information on an insurance group; 6 (3) quantify risk across an insurance group; 7 (4) support transparency into how capital is allocated in an insurance group; and 8 (5) ensure the continuation of essential services that are provided by affiliates of 9 insurers that may be transitioning to a receivership, to mitigate potential disruptions in 10 insurance operations and protect policyholders; Now, therefore, 11 Be it enacted by the Legislature of the Virgin Islands: 12 SECTION 1. Title 22 Virgin Islands Code, chapter 14 is amended as follows: 13 (a) Section 321 is amended by striking “(1), (2), and (3)” of subsection (h), and 14 inserting “(A), (B) and (C)”, respectively; redesignating the subsections as paragraphs (1) 15 through (16), respectively; and by inserting the following definitions in their respective 16 alphabetical order: 17 “Group Capital Calculation Instructions” means the group capital calculation 18 instructions as adopted by the NAIC and as amended by the NAIC from time to 19 time in accordance with the procedures adopted by the NAIC.” 20 “NAIC Liquidity Stress Test Framework” means a separate NAIC publication 21 which includes a history of the NAIC’s development of regulatory liquidity stress 22 testing, the scope criteria applicable for a specific data year, and the liquidity stress 23 4 test instructions and reporting templates for a specific data year, such scope criteria, 1 instructions and reporting template being as adopted by the NAIC and as amended 2 by the NAIC from time to time in accordance with the procedures adopted by the 3 NAIC.” 4 “Scope Criteria” means, as detailed in the NAIC liquidity stress test framework, the 5 designated exposure bases along with minimum magnitudes thereof for the 6 specified data year, used to establish a preliminary list of insurers considered scoped 7 into the NAIC liquidity stress test framework for that data year.” 8 (b) Section 323, subsection (b), paragraph (12) is amended by inserting “(1)” after 9 “section 325(l)”. 10 (c) Section 325 is amended as follows: 11 (1) In subsection (d) by adding a sentence immediately following the last 12 sentence that reads: “The definition of materiality provided in this subsection is not 13 applicable to the group capital calculation or the liquidity stress test framework.” 14 (2) In subsection (l), by designating the existing language paragraph (1) and 15 adding the following paragraphs (2) and (3): 16 “(2) Except as provided below, the ultimate controlling person of every 17 insurer subject to registration shall concurrently file with the registration an annual 18 group capital calculation as directed by the lead state commissioner. The report 19 must be completed in accordance with the NAIC group capital calculation 20 instructions, which may permit the lead state commissioner to allow a controlling 21 person who is not the ultimate controlling person to file the group capital 22 calculation. The report must be filed with the lead state commissioner of the 23 5 insurance holding company system as determined by the commissioner in 1 accordance with the procedures in the Financial Analysis Handbook adopted by the 2 NAIC. Insurance holding company systems described below are exempt from 3 filing the group capital calculation. 4 (A) An insurance holding company system that has only one insurer 5 in its holding company structure, that only writes business and is only 6 licensed in its domestic state and assumes no business from any other insurer. 7 (B) An insurance holding company system that must perform a group 8 capital calculation specified by the United States Federal Reserve Board. The 9 lead state commissioner shall request the calculation from the Federal 10 Reserve Board under the terms of information sharing agreements in effect. 11 If the Federal Reserve Board cannot share the calculation with the lead state 12 commissioner, the insurance holding company system is not exempt from the 13 group capital calculation filing. 14 (C) An insurance holding company system whose non-United States 15 group-wide supervisor is in a reciprocal jurisdiction as described in section 16 1443(h) that recognizes the United States state regulatory approach to group 17 supervision and group capital. 18 (D) An insurance holding company system: 19 (i) that provides information to the lead state that meets the 20 requirements for accreditation under the NAIC financial standards and 21 accreditation program, either directly or indirectly through the group- 22 wide supervisor, who has determined that the information is satisfactory 23 6 to allow the lead state to comply with the NAIC group supervision 1 approach, as detailed in the NAIC Financial Analysis Handbook, and 2 (ii) whose non-United States group-wide supervisor who is not 3 in a reciprocal jurisdiction recognizes and accepts, as specified by the 4 Commissioner in regulation, the group capital calculation as the world- 5 wide group capital assessment for United States insurance groups that 6 operate in that jurisdiction. 7 (E) Notwithstanding the provisions of subsection (l), paragraph (2), 8 subparagraphs (C) and (D), a lead state commissioner shall require the group 9 capital calculation for United States operations of any non-United States 10 based insurance holding company system where, after any necessary 11 consultation with other supervisors or officials, it is considered appropriate 12 by the lead state commissioner for prudential oversight and solvency 13 monitoring purposes or for ensuring the competitiveness of the insurance 14 marketplace. 15 (F) Notwithstanding the exemptions from filing the group capital 16 calculation stated in subsection (l), paragraph (2), subparagraphs (A) through 17 (D), the lead state commissioner has the discretion to exempt the ultimate 18 controlling person from filing the annual group capital calculation or to accept 19 a limited group capital filing or report in accordance with criteria as specified 20 by the commissioner in regulation. 21 (G) If the lead state commissioner determines that an insurance 22 holding company system no longer meets one or more of the requirements for 23 7 an exemption from filing the group capital calculation under this section, the 1 insurance holding company system shall file the group capital calculation at 2 the next annual filing date unless given an extension by the lead state 3 commissioner based on reasonable grounds shown. 4 (3) The ultimate controlling person of every insurer subject to registration 5 and scoped into the NAIC liquidity stress test framework shall file the results of a 6 specific year’s liquidity stress test. The filing must be made to the lead state 7 insurance commissioner of the insurance holding company system as determined 8 by the procedures within the Financial Analysis Handbook adopted by the NAIC. 9 (A) The NAIC liquidity stress test framework includes scope criteria 10 applicable to a specific data year. These scope criteria are reviewed at least 11 annually by the NAIC financial stability task force or its successor. Any 12 change to the NAIC liquidity stress test framework or to the data year for 13 which the scope criteria are to be measured is effective on January 1 of the 14 year following the calendar year when the changes are adopted. Insurers 15 meeting at least one threshold of the scope criteria are considered scoped into 16 the NAIC liquidity stress test framework for the specified data year unless the 17 lead state insurance commissioner, in consultation with the NAIC financial 18 stability task force or its successor, determines the insurer should not be 19 scoped into the framework for that data year. Similarly, insurers that do not 20 trigger at least one threshold of the scope criteria are considered scoped out 21 of the NAIC liquidity stress test framework for the specified data year, unless 22 the lead state insurance commissioner, in consultation with the NAIC 23 8 financial stability task force or its successor, determines the insurer should be 1 scoped into the framework for that data year. Regulators wish to avoid having 2 insurers scoped in and out of the NAIC liquidity stress test framework on a 3 frequent basis. The lead state insurance commissioner, in consultation with 4 the NAIC financial stability task force or its successor, shall assess this 5 concern as part of the determination for an insurer. 6 (B) The performance of, and filing of the results from, a specific 7 year’s liquidity stress test must comply with the NAIC liquidity stress test 8 framework’s instructions and reporting templates for that year and any lead 9 state insurance commissioner determinations, in consultation with the NAIC 10 financial stability task force or its successor, provided within the framework.” 11 (d) Section 326, subsection (a) is amended as follows: 12 (1) In paragraph (1), by adding the following subparagraphs (G) and (H): 13 “(G) (i) If the Commissioner determines that an insurer is in a hazardous 14 financial condition as set forth in sections 519 and 520 of this title, or a condition 15 that is grounds for supervision, conservation or a delinquency proceeding as set 16 forth in chapter 51 of this title, the Commissioner may require the insurer to secure 17 and maintain either a deposit, held by the Commissioner, or a bond, as determined 18 by the insurer at the insurer’s discretion, for the protection of the insurer for the 19 duration of the contract or agreement, or the existence of the condition for which 20 the Commissioner required the deposit or the bond. In determining whether a 21 deposit or a bond is required, the Commissioner shall consider whether concerns 22 9 exist regarding the affiliated person’s ability to fulfill the contract or agreement if 1 the insurer were to be put into liquidation. 2 (ii) When the insurer is determined to be in a hazardous financial condition 3 or a condition that is grounds for supervision, conservation or a delinquency 4 proceeding, and a deposit or bond is necessary, the Commissioner shall determine 5 the amount of the deposit or bond, not to exceed the value of the contract or 6 agreement in any one year, and whether the deposit or bond is required for a single 7 contract, multiple contracts or a contract with a specific person. 8 (H)(i) All records and data of the insurer held by an affiliate are and remain 9 the property of the insurer, are subject to control of the insurer, are identifiable, and 10 are segregated or readily capable of segregation, at no additional cost to the insurer, 11 from all other persons’ records and data. This includes all records and data that are 12 otherwise the property of the insurer, in whatever form maintained, including, but 13 not limited to, claims and claim files, policyholder lists, application files, litigation 14 files, premium records, rate books, underwriting manuals, personnel records, 15 financial records or similar records within the possession, custody or control of the 16 affiliate. 17 (ii) At the request of the insurer, the affiliate shall provide that the receiver 18 can obtain a complete set of all records of any type that pertain to the insurer’s 19 business; obtain access to the operating systems on which the data is maintained; 20 obtain the software that runs those systems either through assumption of licensing 21 agreements or otherwise; and restrict the use of the data by the affiliate if it is not 22 operating the insurer’s business. The affiliate shall provide a waiver of any landlord 23 10 lien or other encumbrance to give the insurer access to all records and data in the 1 event of the affiliate’s default under a lease or other agreement. 2 (iii) Premiums or other funds belonging to the insurer that are collected by or 3 held by an affiliate are the exclusive property of the insurer and are subject to the 4 control of the insurer. Any right of offset if an insurer is placed into receivership is 5 subject to chapter 51 of this title.”; and 6 (2) By adding the following paragraph (6): 7 “(6) (A) Any affiliate that is party to an agreement or contract with a domestic 8 insurer that is subject to subsection (a)(2)(D) is subject to the jurisdiction of any 9 supervision, seizure, conservatorship, receivership or delinquency proceeding set 10 forth in chapter 51 of this title against the insurer, and to the authority of any 11 supervisor, conservator, rehabilitator, liquidator or receiver for the insurer 12 appointed pursuant to chapter 51, for the purpose of interpreting, enforcing and 13 overseeing the affiliate’s obligations under the agreement or contract to perform 14 services for the insurer that: 15 (i) Are an integral part of the insurer’s operations, including, but not 16 limited to management, administrative, accounting, data processing, 17 marketing, underwriting, claims handling, investment or any other similar 18 functions; or 19 (ii) Are essential to the insurer’s ability to fulfill its obligations under 20 insurance policies. 21 (B) The Commissioner may require that an agreement or contract under 22 subsection (a)(2)(D) for the provision of services described in (i) and (ii) of this 23 11 paragraph, specify that the affiliate consents to the jurisdiction as set forth in this 1 paragraph.” 2 (e) Section 330 is amended as follows: 3 (1) In subsection (a), by inserting “are recognized by the Virgin Islands as 4 proprietary and contain trade secrets, and” after “section 329”, and by adding paragraphs 5 (1) and (2) that read as follows: 6 “(1) For purposes of the information reported and provided to the Division of 7 Banking, Insurance and Financial Regulation under section 325(l)(2), the 8 Commissioner shall maintain the confidentiality of the group capital calculation 9 and group capital ratio produced in the calculation and any group capital 10 information received from an insurance holding company supervised by the Federal 11 Reserve Board or any United States group wide supervisor. 12 (2) For purposes of the information reported and provided to the Division of 13 Banking, Insurance and Financial Regulation pursuant to section 325(l)(3), the 14 Commissioner shall maintain the confidentiality of the liquidity stress test results 15 and supporting disclosures and any liquidity stress test information received from 16 an insurance holding company supervised by the Federal Reserve Board and non- 17 United States group wide supervisors.” 18 (2) In subsection (c) by striking paragraph (1) in its entirety and inserting the 19 following new paragraph (1): 20 “(1) The Commissioner may share documents, materials or other 21 information, including the confidential and privileged documents, materials or 22 information subject to subsection (a), including proprietary and trade secret 23 12 documents and materials, with other state, federal and international regulatory 1 agencies, with the NAIC, with any third-party consultants designated by the 2 Commissioner, and with local, state, federal, and international law enforcement 3 authorities, including members of any supervisory college described in section 328, 4 if the recipient agrees in writing to maintain the confidentiality and privileged status 5 of the document, material or other information, and has verified in writing the legal 6 authority to maintain confidentiality.” 7 (3) In subsection (c), paragraph (2), by inserting “(1)” after “section 325(l)” and 8 by striking paragraphs (3) and (4) in their entirety and inserting the following new 9 paragraphs (3) and (4): 10 “(3) The Commissioner may receive documents, materials or information, 11 including otherwise confidential and privileged documents, materials or 12 information, including propriety and trade-secret information from the NAIC and 13 its affiliates and subsidiaries and from regulatory and law enforcement officials of 14 other foreign or domestic jurisdictions, and shall maintain as confidential or 15 privileged any document, material or information received with notice or the 16 understanding that it is confidential or privileged under the laws of the jurisdiction 17 that is the source of the document, material or information; and 18 (4) The Commissioner shall enter into written agreements with the NAIC, 19 and any third-party consultant designated by the Commissioner governing sharing 20 and use of information provided under this chapter consistent with this subsection 21 that must: 22 13 (A) specify procedures and protocols regarding the confidentiality 1 and security of information shared with the NAIC or a third-party consultant 2 designated by the Commissioner, including procedures and protocols for 3 sharing by the NAIC with other state, federal or international regulators. The 4 agreement must provide that the recipient agrees in writing to maintain the 5 confidentiality and privileged status of the documents, materials or other 6 information and has verified in writing the legal authority to maintain such 7 confidentiality; 8 (B) specify that ownership of information shared with the NAIC, or 9 a third-party consultant remains with the Commissioner and the NAIC’s or a 10 third-party consultant’s, as designated by the Commissioner, use of the 11 information is subject to the direction of the Commissioner; 12 (C) excluding documents, material or information reported under 13 section 325(l)(3), prohibit the NAIC or third-party consultant from storing the 14 information shared in a permanent database after the underlying analysis is 15 completed; 16 (D) require prompt notice to be given to an insurer whose confidential 17 information in the possession of the NAIC or a third-party consultant is 18 subject to a request or subpoena to the NAIC or a third-party consultant for 19 disclosure or production; 20 (E) require the NAIC or a third-party consultant to consent to 21 intervention by an insurer in any judicial or administrative action in which the 22 NAIC or a third-party consultant may be required to disclose confidential 23 14 information about the insurer shared with the NAIC or a third-party 1 consultant; and 2 (F) for documents, material or information reporting under section 3 325(l)(3), in the case of an agreement involving a third-party consultant, 4 provide for notification of the identity of the consultant to the applicable 5 insurers.” 6 (4) In subsection (f) by inserting “or a third-party consultant designated by the 7 Commissioner” after “NAIC”. 8 (5) By adding the following subsection (g): 9 “(g) The group capital calculation and resulting group capital ratio required 10 under section 325(l)(2) and the liquidity stress test along with its results and 11 supporting disclosures required under section 325(l)(3) are regulatory tools for 12 assessing group risks and capital adequacy and group liquidity risks, respectively, 13 and are not intended to rank insurers or insurance holding company systems 14 generally. Therefore, except as otherwise provided under this chapter, the making, 15 publishing, disseminating, circulating or placing before the public, or causing 16 directly or indirectly to be made, published, disseminated, circulated or placed 17 before the public in a newspaper, magazine or other publication, or in the form of a 18 notice, circular, pamphlet, letter or poster, or over any radio or television station or 19 any electronic means of communication available to the public, or in any other way 20 as an advertisement, announcement or statement containing a representation or 21 statement with regard to the group capital calculation, group capital ratio, the 22 liquidity stress test results, or supporting disclosures for the liquidity stress test of 23 15 any insurer or any insurer group, or of any component derived in the calculation by 1 any insurer, broker, or other person engaged in any manner in the insurance business 2 is misleading and is therefore prohibited; provided, however, that if any materially 3 false statement with respect to the group capital calculation, resulting group capital 4 ratio, an inappropriate comparison of any amount to an insurer’s or insurance 5 group’s group capital calculation or resulting group capital ratio, liquidity stress test 6 result, supporting disclosures for the liquidity stress test, or an inappropriate 7 comparison of any amount to an insurer’s or insurance group’s liquidity stress test 8 result or supporting disclosures is published in any written publication and the 9 insurer is able to demonstrate to the Commissioner with substantial proof the falsity 10 of the statement or the inappropriateness, as the case may be, then the insurer may 11 publish announcements in a written publication if the sole purpose of the 12 announcement is to rebut the materially false statement.” 13 BILL SUMMARY 14 This bill amends title 22 Virgin Islands Code, chapter 14 to implement revisions to the 15 NAIC’s Insurance Holding Company System Regulatory Act Model Law, to ensure the Virgin 16 Islands continued compliance with NAIC accreditation standards and to strengthen insurance 17 laws to protect policyholders in the Virgin Islands. 18 BR25-0822/September 3, 2025/SLR 19 G36-030 20