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In 2017, the Cayman Islands Monetary Authority will continue to engage with the captives industry, and collaborate with other stakeholders to identify areas where greater efficiency, flexibility and innovation are necessary.
Since the introduction of the Insurance Law in 1979, the Cayman Islands has become a major centre for international insurance business. Today, it is the second largest domicile for international insurers, and holds the number one position worldwide for healthcare captives.
Despite the competitive market, especially with emerging onshore captives domiciles such as the US, 33 new insurer licensees have been added to the international insurance market as of September 2016. This reflects a 33 percent growth, compared to the number of new licences issued in 2015.
One of the exciting developments in the Cayman Islands market is the recent trend in new captive or re/insurance company formations, particularly backed by subsidiaries within international insurance groups, intermediaries and hedge-funds.
"Given the number of enquiries from existing and prospective licensees, a steady increase in PIC formations is expected over the next year."
As the regulator of the world’s largest healthcare captive jurisdiction, the Cayman Islands Monetary Authority (CIMA) has recognised that the globalisation of insurance markets evolves at a rapid pace. Captive structures are being put to more sophisticated use by their owners and the authority strives to ensure that Cayman’s insurance sector is regulated in accordance with international best practices, while having consideration for the competitiveness and required innovation to remain one of the top leading domiciles.
New man in charge
Since the previous publication a significant achievement for CIMA, and in turn the industry, has been the appointment of Ruwan Jayasekera as head of the Insurance Supervision Division. He was confirmed to the post, effective July 14, 2016.
With more than 15 years of experience in insurance, in both regulatory and industry roles, Jayasekera brings a wealth of knowledge to the field.
The division has always had a strong team but this appointment adds value to the effectiveness of the authority. Filling this role also supports CIMA’s regulatory philosophy, which is to remain responsive, pragmatic and accessible to its licensees, while ensuring sound supervision.
Effects of portfolio insurance companies
The enactment of the portfolio insurance companies (PIC) legislation in early 2015 has also resulted in positive changes within the industry. PICs were introduced as an innovation to the existing segregated portfolio company (SPC) structure. One of the key benefits of a PIC is the ability to transact with other PICs and standalone re/insurance companies. Another advantage is that a PIC can have its own legal identity with a board of directors, without the risk of contaminating the core business or existing business.
Many captives also consider it to be more cost-effective to establish an SPC first and create PICs within the SPC as business grows, thereby saving time and money.
Six PICs are currently registered with the CIMA. However, given the number of enquiries from existing and prospective licensees, a steady increase in PIC formations is expected over the next year. This will be more evident as people become more aware of the innovative ways PICs can be used.
With the changing landscape in the healthcare industry, especially within the US, the authority is optimistic about the new opportunities that this may present for captive insurers as it relates to volume and non-traditional risks.
In 2017, the CIMA will continue to engage with the captives industry, and collaborate with other stakeholders to identify areas where greater efficiency, flexibility and innovation are necessary.
Given its robust, yet flexible and competitive regulatory regime, infrastructure and high levels of expertise and experience, the Cayman Islands will continue to maintain its position as a leading world-class jurisdiction for offshore insurance.
CIMA, Cayman Islands, Insurance, Reinsurance, Captive, Hedge-funds, Funds, Legislation, Regulation, Ruwan Jayasekera, North America