Bermuda opens economic substance declaration portal
Captive insurers will fall within the scope of economic substance, but will see a relatively modest impact on their day-to-day business compared with some other sectors in Cayman, according to panellists at the Cayman Captive Forum.
“Captive insurers don't need to worry too much. The Cayman Islands Monetary Authority (CIMA) has always required companies operating here have economic substance here,” said Ruwan Jayasekera, head of insurance at CIMA. “This is not an attempt to fundamentally change how captives operate in Cayman.”
Derek Stenson, partner at Conyers, Dill and Pearman, said: “Other parts of Cayman are having much bigger problems with economic substance than insurers.”
Dena Thompson, client services director at Artex, said in general captives based in Cayman are already doing a lot of what they will be required to do to comply with the economic substance rules as they currently stand – although the latest draft of the rules is currently under consultation. The most important thing is for everyone involved in the industry to be diligent in recording what decisions were taken, and why.
“Its about documentation, documentation and more documentation,” said Thompson.
Some captives may need to take steps to show that the prediction and calculation of risk happens in Cayman, noted Dara Keogh, managing partner at Grant Thornton. It is not yet clear whether the final rules will require such actuarial work be done in Cayman, he said.
Reports currently compiled for CIMA and investors already fulfil some of the other requirements the rules will impose, he added.
Stenson said the industry is getting too hung up on the question of whether the rules will require board meetings be held regularly on the island. The rules are pitched at a macro level and do not provide details about the specifics of board meetings, he said. But captives that use Cayman service providers but do not hold regular fully attended board meetings in Cayman are more likely to be compliant than those that are strict about having board meetings in Cayman but use off-island service providers, he warned.
Cayman Captive Conference, CIMA, Conyers, Dill and Pearman, Artex, Captive, Dena Thompson, Derek Stenson, North America, Cayman Islands