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(Reuters) – The U.S. Virgin Islands for years redirected money intended to help pay insurance claims after large disasters for other needs, raising the vulnerability of residents as Hurricane Irma ravishes the territory.
During years of yawning budget deficits, the U.S. protectorate tapped the V.I. Insurance Guaranty Fund to pay for other public services, according to government financial records reviewed by Reuters. Since 2007, nearly $200 million was transferred from the fund, including $45 million in fiscal 2011.
Insurance guaranty funds, present in every state and some territories, pay outstanding claims to residents and property owners if an insurance company becomes insolvent.
The island chain of St. Thomas, St. Croix, and St. John relied on its insurance guaranty fund to pay claims after Hurricanes Hugo in 1989 and Marilyn in 1995, according to a 2007 government news release.
In 2012, government leaders reduced the minimum balance of its insurance guaranty fund to $10 million from $50 million. The fund earns about $16 million annually in revenue. […]
As of August, the Virgin Islands government had about three days’ cash to pay for operations, according to rating agencies.
In response to the downgrades, the Virgin Islands government said it was “aggressively and proactively” cutting spending and increasing revenues through more stringent tax collections and new so-called “sin taxes” on liquor, cigarettes and sugary drinks.
U.S. Virgin Islands government still owes money for damages and services racked up during previous storms, according to financial statements published in June.
Keep reading…
(Reuters) – The U.S. Virgin Islands for years redirected money intended to help pay insurance claims after large disasters for other needs, raising the vulnerability of residents as Hurricane Irma ravishes the territory.
During years of yawning budget deficits, the U.S. protectorate tapped the V.I. Insurance Guaranty Fund to pay for other public services, according to government financial records reviewed by Reuters. Since 2007, nearly $200 million was transferred from the fund, including $45 million in fiscal 2011.
Insurance guaranty funds, present in every state and some territories, pay outstanding claims to residents and property owners if an insurance company becomes insolvent.
The island chain of St. Thomas, St. Croix, and St. John relied on its insurance guaranty fund to pay claims after Hurricanes Hugo in 1989 and Marilyn in 1995, according to a 2007 government news release.
In 2012, government leaders reduced the minimum balance of its insurance guaranty fund to $10 million from $50 million. The fund earns about $16 million annually in revenue. […]
As of August, the Virgin Islands government had about three days’ cash to pay for operations, according to rating agencies.
In response to the downgrades, the Virgin Islands government said it was “aggressively and proactively” cutting spending and increasing revenues through more stringent tax collections and new so-called “sin taxes” on liquor, cigarettes and sugary drinks.
U.S. Virgin Islands government still owes money for damages and services racked up during previous storms, according to financial statements published in June.
Keep reading…
