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 Law, 2010 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 general business must have paid-in capital per the summary below. Thereafter, the level of surplus is determined by the level of third party (non related) business of the company, and the risk management framework adopted including 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.
The Insurance Law 2010 classifies the company based on the level of non-related risk as follows:
Class B(i) At least ninety-five percent of the net premiums written will originate from the insurer's related business;
Class B(ii) Over fifty percent of the net premiums written will originate from the insurer's related business; or
Class B(iii) Fifty per cent or less of the net premiums written will originate from the insurer's related business.
Government fees and capital are as follows:
|Solvency of Net Earned Premium
|Application fee (including first year license fee)
|Annual corporate fee
|Annual insurance license fee
Segregated Portfolio Companies (SPC's)
A company organised as a SPC can establish one or more segregated portfolios to ring fence or "silo" these seperate insurance programs or risks.
The costs of forming as a SPC are as follows:
Application Fee US$1,342
CIMA Fee as above, plus US$305 per segregated portfolio and US$2,439 for the company.
Tax Exemption Certificates
A Tax Exemption Certificate exempts the company from any tax in the Cayman Islands for 20 years. There is a one off cost for this of US$1,829
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.
IMAC (Insurance Managers Association of Cayman) has produced an informative factsheet on the island. Please click this link to access it.