svf74 /
28 November 2018

Cayman leading the way in captive insurance and reinsurance

Cayman’s sustainable competitive advantages are based on its appropriate legislative and regulatory balance, the commitment of the Cayman Islands government and the Cayman Islands Monetary Authority (CIMA) to work with its diversified industry with several strong and distinct world-class sectors.

In addition to insurance and reinsurance, the Cayman Islands continues to be a top jurisdiction for the formation of alternative investment fund products, with the world’s top managers using Cayman Islands vehicles in their structures. Cayman also has a well-established, robust, banking regime supported by world-class anti-money laundering regulation and appropriate and effective cross-border cooperation. Capital markets and trusts are other areas for which we are recognised as being a preferred jurisdiction.

The growth in Cayman’s financial services industry is a reflection of the quality of the jurisdiction’s professionals. In addition to attracting investment, they have attracted the praise of their peers, ranking as the Top Specialized Financial Center by The Banker for nine years in a row. Cayman has been voted Best Hedge Fund Services Jurisdiction and Top Offshore Captive Domicile.

Not being reliant on a single sector within financial services enhances the ability to draw in a wide range of talented professionals, which helps Cayman maintain an exceptional world-class business culture.

The Cayman Islands is the second largest domicile in the world for captives and the number one domicile for healthcare captives. Cayman was a first adopter in the insurance-linked securities (ILS) space, meshing expertise in securitisation, insurance and capital markets to create the most innovative structures, addressing complex risk scenarios.

A premier global financial hub

The Cayman Islands is a premier global financial hub, efficiently connecting law-abiding users and providers of investment capital and financing around the world. Cayman is an excellent extender of value for major economies, pooling capital from around the world for investment in assets and projects in developing and developed countries.

The World Bank Group’s International Finance Corporation (IFC) uses Cayman funds to promote growth in emerging markets. The IFC uses Cayman because it offers an efficient and effective neutral platform that enables parties from around the world with differing laws, regulations, tax rules and customs to benefit from doing business with each other.

Cayman is one of the few jurisdictions that meets the IFC’s stringent standards for investments in intermediate jurisdictions. Cayman’s Global Financial Rating has never been adjusted downwards which is pretty rare among our Caribbean neighbours.

Power in the people

Cayman continues to do what it does best with a focus on excellence in client services. In terms of addressing the competition, it benefits from certain inherent competitive advantages such as our one-stop shop feature and access to some of the world’s best professionals in the areas of insurance, legal and accounting services. These are features that our competitors cannot replicate easily.

In particular, Cayman’s insurance service providers are known for their responsive, inclusive and collaborative approach to developing and supporting new client-driven products, including ILS and hedge fund and private equity-backed reinsurance companies. The access to other key areas of financial services to our captive clients—whether it’s banking services, or accessibility to highly qualified insurance managers, world-class accountants and attorneys—is one of our key strengths as a captives domicile.

The growth of reinsurance

Last year, Cayman Finance formally launched reinsurance as a new industry sector, and it has been an exciting year. While still in its growth period, the reinsurance entities established to date have already become a significant portion of all insurance-related assets under management in the jurisdiction. This sector is primed to be one of the areas that the jurisdiction can continue to capitalise upon.

The growth rate of new reinsurance firms opening in Cayman confirms the thoughts of Cayman Finance, the government and CIMA that it is an industry that is here to stay. Firms such as Greenlight Re, Aureum Re, Knighthead, OxbridgeRe and more have either opened on-island or have expanded and grown their businesses in recent years.

In order to ensure that this growth continues and is well sustained
into the future, the Cayman Finance reinsurance sector sub-committee is working closely with the Cayman Islands government and CIMA to make Cayman as attractive as possible to potential reinsurance businesses, in particular by making solid efforts to enhance our insurance regulatory framework, and by engaging with the international standard setters such as the International Association of Insurance Supervisors and regulatory associations such as the National Association of Insurance Commissioners.

Fintech for insurance

A notable development for this industry sector is that late last year, CIMA approved the licensing of an insurtech insurer. This is a third party class B company which can be described as applying technology to traditional insurance practices to drive efficiencies and enhance customer experiences, while using the internet and social media for their distribution model that is hosted by a related party specialist.

Protecting Cayman as a jurisdiction

Organisations like Cayman Finance and the Insurance Managers Association of Cayman (IMAC) have worked hard to represent the jurisdiction at key international events, and these organisations along with CIMA ensure the regulatory framework and other features are in place to maintain the jurisdiction’s reputation as a first-class financial services centre.

Monitoring and addressing regulatory developments has always been one of our strengths as a jurisdiction. The key is to strike the appropriate balance between adherence to global standards while encouraging economic growth of each sector. We continue to do this via a unique partnership between the private and public sector stakeholders.

The combined efforts of the Cayman Islands government, CIMA and Cayman Finance ensure that the financial products and services are consistently delivered to meet or exceed international standards through excellence, innovation and balance.

Cayman Finance and its partners, including government, continue to work collaboratively to develop innovative and effectively regulated new financial services products and services to help grow the industry, in particular captive insurance and reinsurance.

Jude Scott is chief executive officer of Cayman Finance. He can be contacted at: