US Virgin Islands Wasted Hurricane Relief Money in Years Past
Their government is going to have some very hard questions to answer once the initial shock of the hurricane’s passing is through:
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.
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.
Territory officials could not be reached for comment on Wednesday. In response to questions from Reuters about the fund in late July, government officials responded that it had “borrowed money from time to time, but this has not been an issue.”
As of August, the Virgin Islands government had about three days’ cash to pay for operations, according to rating agencies.