Jodi Jacobson /
1 December 2017Analysis

The evolution of the Cayman Captive Forum

A visitor to the Cayman Islands in 1993 might not have noticed at the time, but a small but significant event look place there that year. A relatively small group of experts in the captive insurance industry met in a room for the inaugural Cayman Captive Forum.

This year’s conference will be vastly different, with 1,400 attendees, a wide range of seminars and other sessions and the kind of coverage in the national and trade press that the first meeting could only dream about. Organised by the Insurance Managers Association of Cayman (IMAC), this year’s forum is a very different creature from the 1993 event.

“I’m the longest serving member of IMAC and I’ve been around for every conference we’ve had,” says Peter MacKay, chairman & CEO of Global Captive Management.

“How much has it changed? In a word, dramatically. When we first set up the forum, we were a small association and it was held at the Grand Pavilion.

“We didn’t have many people and it was difficult for us to do it, so an outside organisation ran it for many years. They did a reasonable job, but we felt that there wasn’t enough emphasis on training for our staff and we took it back in-house 17-odd years ago.”

Humble beginnings

The decision for IMAC to take over running the conference was not taken lightly. Michael Gibbs, president of Kensington Management Group, started attending the Cayman Captive Forum back in the mid-1990s when he first became involved in the industry.

“At that time, the conference was promoted by an external conference organiser, with the insurance managers working closely with them to provide the content for the conference,” he says.

“In the late 1990s and early 2000s IMAC was discussing how best to run the conference, and in my second year as chairman, the executive committee made the decision to take over the conference and run it ourselves.

“I had the unenviable task of calling the conference organiser and telling them that we were not going to be working with them again, so that was a fun conversation as you can imagine!”

According to Gibbs, the IMAC executive committee knew from its relationships with the various service providers on Cayman—the banks and audit firms—that they were willing to support IMAC. At the first revamped conference in 2003, Butterfield Bank was the welcome night sponsor, KPMG was the lead sponsor and PriceWaterhouse was the closing night sponsor—an arrangement that continues today.

Gibbs says that IMAC has had a great relationship over the past 14 or so years with its primary sponsors and it’s continued to grow from there. He points out that for the sponsors, knowing that any profits from the conference will go either to helping IMAC further promote the domicile, or into its Educational Scholarship Trust Fund, meant it was a win-win situation for the domicile and the scholarship foundation.

“It is one of the primary reasons we’ve maintained the level of support and I think the ongoing success of the conference will continue to fuel that,” says Gibbs. “In the early days, if we had 150 people in attendance, we thought we were doing really well. In 2003, our first year of organising it ourselves, we had more than 250 and the following year it was 400-plus.

“It’s gone up to the current levels of the last couple of years, around 1,500—a great success story.”

Through stormy times

MacKay says it was the 2004 conference that made the difference. “What really made us in many ways was Hurricane Ivan, which hit in 2004,” he points out. “Cayman was devastated, I had to move my office off-island, because it was destroyed, as was my accommodation.

“We decided to go ahead with the conference, and we had one of the best turnouts we’d ever had, because people wanted to support us. It was the first major event back in Cayman after Ivan and it was a great turnout; from then we’ve gone from strength to strength.

Now we’re the largest captive conference in the world, we’ve become a marketplace for reinsurers, insurers, brokers—they all come.”

According to MacKay, the quality of the people who now come to the event tends to be on the levels of the CEO/CFO and other senior executives, which is exactly the level that the marketplace is trying to reach. The forum has grown dramatically over the years in terms of size and relevance. MacKay also notes that a significant portion of the money IMAC makes from the forum goes back into the scholarship fund. This fund was formed 23 years ago and since inception has assisted 42 students with their secondary education.”

The growth of the conference has been reflected in the way that the venues for it have changed. Paul Arbo, partner at BDO Cayman Islands, has been attending the forum since 2005, shortly after arriving in Cayman from Canada. That was the last year it was held at The Westin, before it moved to the newly-opened Ritz Carlton hotel in 2006 which provided a much larger and more luxurious venue.

“I recently read a news article from 2006 which stated that attendance for the forum that year jumped from 540 in 2005 to over 750 that year,” says Arbo.

“That compares with the more than 1,400 registrations the forum has attracted in the past two years. As the numbers prove, the Cayman Captive Forum has widely become known as the best of the captive insurance-specific conferences on the globe.

“For me, personally, the week of the forum is a highlight on the calendar, in terms of renewing and striking new professional relationships as well as the bonding aspect of working with our fellow service providers here in Cayman to put on a memorable week for our guests.”

Staying edgy

The issue of how to make the forum relevant and attractive to prospective attendees is one that IMAC has to address every year. MacKay says people come to the event for the education and networking opportunities—they’re able to meet their peers there to find out what they’re doing to improve or expand their operations, at both captive and parent level.

“Healthcare remains our major liability line,” says MacKay. “We have three tranches in that area, hospitals, physicians and home health/ nursing homes, and other related associated lines.

“There’s a lot of turmoil there, with healthcare reimbursements down, and the healthcare landscape is changing. This is resulting in a lot of mergers and acquisitions, not just in healthcare but also with physicians groups.

“Those mergers create challenges: what do you do with all the legacy losses in other systems you take over? If they’ve got a captive you can run that off or merge it into your current captive. You can use the captive to smooth out the disruption in the industry.”

According to MacKay, the conference organisers try to look at what is going on at the moment and what is pertinent to people, and then put on presentations that reflect that. As a result this year there will be a fair amount of looking at mergers and acquisitions and how to make things run as smoothly as possible.

MacKay points out that there’s a lot of changes going on for captive managers right now, with increased compliance reporting and tax information gathering including the impact of FATCA and CRS reporting requirements. That changes a lot and also requires the insurance companies to do more reporting.

“Obviously, what we’re trying to do is not get on the blacklist of the OECD,” MacKay adds. “Cayman as a jurisdiction has substantially more compliance requirements in comparison to other jurisdictions like the US but there’s always that perception that we’re a tax haven—which we’re not.”

Arbo adds that as far as he is concerned, overall the Cayman captives market has seen a great amount of innovation in terms of new uses in the last number of years, allowing it to gain wider appeal than would have otherwise been possible had it decided to rest on its laurels.

Globally, the traditional insurance market has been soft for an extended period of time now and Arbo thinks that this trend is clearly not sustainable, especially in light of the major weather events which the market has seen this year. Of course, as the traditional market hardens and starts to experience higher premium levels and less access to coverage, the interest in captive solutions takes a decided turn upward and the innovation which Arbo mentions is only going to exacerbate that trend.

“In my mind, the Forum Committee of IMAC needs to continue doing a great job of staying in tune with the changes taking place in the wider industry, not only here in Cayman but globally, in order to keep the forum content relevant to the users and influencers who attend the forum each year and appeal to new audiences,” says Arbo.

“The only thing left to do will be to find a way to expand the physical facilities available for the forum site in order to allow the registration figures to grow even further than the current 1,400—‘we’re going to need a bigger beach!’.”

The Cayman Captive Forum—a potted history

In 2017 the Cayman Captive Forum celebrates its 25th anniversary. It started life in 1993 as a small event that attracted a fraction of the people who will attend this year—and has grown in leaps and bounds since that quiet first gathering of members of the Cayman captives industry.

This year 1,400 specialists including captive directors, CFOs, risk managers, service providers and captive managers from around the world will converge again in the Cayman Islands to discuss the issues most pressing to the captive insurance industry.

Here is a short history of the event, and the other events that it has been affected by.

1966: The Cayman Legislative Assembly passed the Banks and Trust Companies Law of 1966, which laid the basis for offshore finance services.

1979: The Cayman Islands Insurance Law is passed, designed to attract international insurance business to Cayman.

1993: The first Cayman Captive Forum takes place.

1994: IMAC creates its Educational Scholarship Trust Fund to assist with the post-high school education of young Caymanians.

2003: IMAC takes over the running of the forum, announcing that any profits will go back to its scholarship fund and IMAC members.

2004: Hurricane Ivan hits the Cayman Islands as a Category Five storm, causing widespread damage. 85 percent of the buildings on the Cayman Islands are damaged, either from high winds or the storm surge that hits the area. Total damage comes to $2.8 billion. Despite this the Cayman Captive Forum goes ahead in the wake of the hurricane, the first major event since Ivan that shows that the Islands are back in business.

2009: IMAC’s scholarship fund tops $1 million for the first time.

2010: An updated version of the Caymans Islands Insurance Law is passed, aligning Cayman law with international law, strengthening the regulatory powers of the Cayman Islands Monetary Authority (CIMA), enhancing protection for policyholders in Cayman’s domestic market and facilitating Cayman’s further development of reinsurance and insurance-linked securities business.

2012: The Cayman Islands Insurance Law comes into force.

2017: IMAC announces that following an excellent year for new insurer licences issued in 2016 (39), the Cayman Islands insurance industry has set a brisk pace to new formations so far in 2017 with 23 new licences issued. In the third quarter there were seven new class B formations which include two third-party insurers. For the whole of 2017 to date there have been 20 class B licences issued, 11 of which represent third party insurers, and three class C licences.