Interest in cell captives drives growth in Labuan IBFC

The number of captives operating in the Labuan International Business and Financial Centre (Labuan IBFC) increased by 15.4 percent in 2020.

Labuan IBFC saw eight new captives set up in 2020, meaning there were 55 captives operating from the jurisdiction at the end of 2020.

A report published by Labuan IBFC found that a quarter of all captives licensed in Asia and the Middle East and North Africa (MENA) regions are domiciled in Labuan, which it said makes it the fastest growing captive centre in Asia. Asia is also the fastest growing region in the world for captives, with year on year growth of 6.3 percent, according to the report.

Although global captive numbers fell slightly in 2020, there was a surge in captive cell formations, the report noted. Labuan IBFC is the only jurisdiction in Asia which provides for the formation of protected cell companies, the largest growth vertical within the self-insurance industry in 2020, it said.

Farah Jaafar-Crossby, chief executive officer of Labuan IBFC, predicted that growth in 2021 will be even stronger than what was seen in 2020.

“In terms of gross written premiums, Labuan’s captive insurance business already accounts for 31.2 percent of the total gross premiums underwritten in Labuan IBFC, amounting to 497.5 million, with 65.4 percent of the total premiums originating from international markets,” she said. “These numbers clearly indicate a coming of age and maturity of the market, making Labuan IBFC a truly global domicile of choice.”

Farah added: “We are also extremely proud to be listed as 16th out of 71 global domiciles with the greatest number of captive formations in 2020, leading the captive industry in Asia and MENA.”

Roy Sharma, chairman of Labuan International Insurance Association (LIIA), the industry body representing all insurance related licensed entities, said LIIA will set up a captives sub-committee to give it a stronger voice in the jurisdiction.

“The growth of captives has been in tandem with the increase in our association members as well as ancillary service providers in Labuan,” he said. “We now have more than 220 insurance and risk management licenses and LIIA plays a pivotal role in Labuan IBFC”.