Cayman Islands

The Cayman Islands are the oldest and most established captive insurance domicile in the Caribbean. Many captives still in existence today predate the 1979 Insurance Law, a testimony to the quality of the domicile and its infrastructure.

Cayman is also recognized as the leading domicile for healthcare and related captives, whether these are from physician groups, individual hospitals, health systems, nursing homes or assisted living facilities. International business is also well received in the Cayman Islands which is the fifth largest financial centre in the world, with first class legal, banking and accounting service providers.

The establishment, licensing and operation of captive insurance companies are governed by the Insurance Act 1979 (as amended) and by guidance notes issued by the Cayman Islands Monetary Authority (CIMA). The Companies Law 2004 makes provision for the establishment of Segregated Portfolio Companies.

The principal features of the regulatory requirements are:

• Captives must be licensed under the Act. The license is renewable annually
• Company name subject to approval
• Minimum of two directors
• Captives must appoint a resident insurance manager
• Annual audit of all captives to be submitted to CIMA
• Actuarial valuation of life insurers annually

Capital, Margin of Solvency and Government Fees

Companies carrying on long-term business must have paid-in capital of at least US$240,000.

Companies carrying on general business must have paid-in capital of at least US$120,000. Thereafter, the level of surplus is determined by the business risks of the company, the historical loss ratios, and the financial strength of the parent company. CIMA has an open door approach to discussing solvency rather than relying on fixed ratios although, as a rule of thumb, a ratio of 3:1 to 5:1 is generally accepted.

Government fees are payable as follows:

Application

When applying for an insurance license, the applicant company must provide a detailed business plan accompanied by 5 year financial projections.

The entire establishment process, from the time of submitting a completed license application to the CIMA, including incorporation, should be accomplished in 6 to 10 weeks.