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Tuesday, September 27, 2022
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Senate Looks at Insurance Bill

A law requiring outside insurance companies to have an agent residing in the territory countersign its policies should be eliminated to clarify what insurers must do in the wake of a 2006 U.S. District Court case striking down the law as unconstitutional, proponents testified to the Legislature Wednesday.

The Legislature took testimony on the bill, which was requested by Government House, during a Committee of the Whole hearing on St. ThomasAttorney Henry Feuerzeig of the St. Thomas law firm of Dudley, Topper and Feuerzeig told the Legislature the U.S. District Court found, in that case (Council of Insurance Agents and Brokers V. Vargrave Richards, in his official capacity as the Commissioner of Insurance), that the local law violated the privileges and immunities clause of the U.S. Constitution, striking the requirement for a counter-signatory to actually reside in the territory.

But because the law remained on the books, requiring someone to countersign, there has been some confusion among insurers about how to proceed in compliance with the law, Feuerzeig said.

The requirement also likely increased the cost of policies because it split the commission on the policy with the local signatory, he said.

Policies would still need to be counter-signed by agents licensed to do business in the territory, said V.I. Director of Banking and Insurance John McDonald. But those agents would not have to maintain a residence and office in the territory, he said.

"You do have to obtain a license in the territory, either by taking the insurance exam or by asking for reciprocity with that particular state," he said.

"So it is a conflict between the U.S. Constitution and directing money to locals?" asked Sen. Neville James.

Feuerzeig agreed, but noted the territory would continue to get licensing fees from the agent.

Sen. Janette Millin-Young, who was chairing the meeting in the absence of Senate President Ronald Russell, said the bill would be voted upon during legislative sessions scheduled for Nov. 19 and 20.

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