Cayman well-placed for growth in 2025
The Cayman Islands are continuing to adapt to a wide range of issues that are impacting the global captive market – but is coping well as a domicile and leading the way in many respects.
That was the message from one of the first sessions at the 2024 Cayman Captive Forum. Entitled Regulatory / Industry Update / Trends, Ricardo Agrella, partner at PwC, George Kamau, deputy head insurance supervision division at the Cayman Islands Monetary Authority (CIMA) and Menelik Miller, a counsel at Appleby went through the main developments that impacted the Cayman Islands’ captive insurance industry.
Miller spoke about CIMA’s recent rules & statement of guidance on reinsurance arrangements. These include reminders about board responsibilities – must meet annually & oversee the reinsurance strategy, CIMA must be notified of material changes to any plans. “Material changes can be many things,” said Miller. “Increases in cover, etc. Any changes in strategy they must notify CIMA.”
He underlined that for programme elements, there must be a clear structure, with stress testing for cat events, defined retention levels and exposure limits.
Looking at some of the trends that the panel was seeing, it was pointed out that single parent captives, group captives and commercial reinsurers are expanding globally - but Cayman remains a leading jurisdiction for captives and reinsurance.
Emerging opportunities include increasing interest from industries like technology and cryptocurrency. And, enhanced collaboration between captives and reinsurers.
The panel said that there is synergy between captive and reinsurance markets – reinsurance growth bolsters the captive ecosystem. Enhanced risk management and collaborations with reinsurers are providing tailored solutions having broader risk transfer options for captives.
Innovations in crypto risk management – solutions for insuring customers (hot and cold wallets), both captive and commercial insurance models, were highlighted. Cayman’s advantage – scalability of captive structures for institutional customers and a focus on strong regulatory compliance and security was also discussed.
Kamau said that CIMA is seeing more single-parent captives and that there had been an uptake in portfolio insurance company (PIC) registrations in 2024, with the main PIC lines of coverage being in workers compensation, general liability, auto liability and physical damage. The construction industry is leading the PIC formations, he said, pointing out that of the five new formations up to October 31, 2024, four were construction-related and one was related to healthcare
As Cayman approaches 2025, potential regulatory changes include the introduction of Class B(iv) licence category to cater for medium-large reinsurance companies based on volume of growth / premiums written. There is also the possible introduction of MGA’s licence category and the introduction of reinsurance broker category, although these changes will be subject to private sector consultation.
For Agrella, some of the trends that he identified include the expansion of coverage limits, especially in medical professional liability, increased focus on cyber risk coverage, increased ESG awareness & consideration, increased integration of climate risk into risk management framework of organisations, adoption of business interruption coverage into insurance programmes under different scenarios including pandemic & adoption of employees benefit programs caused by rising healthcare and insurance costs.
The panel agreed that 2025 should be similar to 2024, with continued regulation as the industry evolves. Captive owners are exploiting new lines of coverage, they believe, with the most popular being cyber and medical stop loss coverages and an increase in newly established captives, including b(iii) licences and group captives. Finally, captives continue to adapt and benefit from macro-economic events that include climate change.
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