Cayman enjoys biggest spike in new formations in 3 years

Volatility in pricing and changes in terms and conditions in the commercial insurance marketplace last year led to a big increase in captive formations, new figures released by the Cayman Islands Monetary Authority (CIMA) reveal.

In 2020, the domicile, which is home to one third of all healthcare captives globally, enjoyed the biggest annual increase in the formation of new insurance-related entities since 2017.

The Cayman Islands ended 2020 with 36 new insurance company formations, the largest annual increase since 2017. Accompanying the new B (31), C (3) and D (2) licenses, were 12 new portfolio insurance company (PIC) approvals and a new insurance manager.

Although formations in the first two quarters of 2020 were somewhat flat owing to continued consolidation in the US healthcare space, the number of new formations accelerated in the third and fourth quarters.

In the second half of the year there was a sharp increase in new formation numbers as both corporate and insurance company clients looked to establish alternative risk transfer structures to better manage the continued price and coverage volatility being experienced in the commercial marketplace.

There were also solid increases in the number of Cayman reinsurance captive/company formations last year, a trend that is expected to continue into 2021 and beyond. Cayman finished the year with a total of 630 B licenses, 23 C license and 5 D licenses as well as 36 PIC licenses.

Colin Robinson, chair of the Insurance Managers Association Cayman (IMAC), said: “We are extremely encouraged by the industry's 2020 figures which recorded a three-year high. This increase demonstrates the industry's resilience during difficult times and the Cayman Islands strength as a leading jurisdiction. We expect that 2021 will continue to be another excellent year for growth as an industry and we look forward to continuing to meet the growing needs of our present and future captive owners.”