28 November 2013Cayman analysis

Cayman— constantly innovating

With the implementation of the new Insurance Law (2010) last year, we are starting to see an uptick in the formation of reinsurance companies, with plenty more in the pipeline. Cayman’s new Insurance Law and accompanying regulations have modernised the Cayman offering, ensuring that different areas of insurance—domestic insurance, captive insurance companies, insurance-linked securities and reinsurance companies—are all regulated based on the uniqueness of their structures and on their own individual risk profiles, which is what any commercially-minded company would want.

Earlier this year the portfolio insurance company (PIC) legislation was implemented, which should pave the way for new alternative risk management structures to domicile in Cayman. This legislation allows the segregated portfolios of these structures to incorporate separate stand-alone exempted companies, known as PICs. Such a structure allows for increased corporate governance, provides greater tax certainty as to the US tax status of the cell and it is more readily migrated to a stand-alone captive, which works well for incubation purposes.

Growth in the industry continues. As of September 30, 2013, the Cayman Islands Monetary Authority (CIMA) reported 755 insurance companies under its supervision (413 pure captives and 137 SPCs), with total premiums of $13.8 billion and total assets of $85.6 billion.

Meanwhile, Cayman has continued to lead the way in terms of actively participating in the development of international regulatory initiatives with a view to continuing to attract and retain the kind of high quality business that is the backbone of our economy. Cayman has agreed to sign a Model 1 intergovernmental agreement with the US in support of the new Foreign Accounts Tax Compliance Act (FATCA), solidifying information exchange between the two tax authorities. In April, Cayman received top marks in the OECD’s latest Global Peer Review, which reviews transparency and exchange of information for global tax purposes.

Cayman now has 31 tax information exchange agreements (TIEAs) in place, and most recently signed agreements with Brazil and Argentina, preparing the ground for opportunities within the burgeoning Latin American market. A TIEA with Canada was signed in 2011 and the Insurance Managers Association of Cayman (IMAC) has been making inroads into the Canadian market through our attendance at the Canadian RIMS Conference held this past October in Victoria, British Columbia.

The Cayman Islands Stock Exchange (CSX) is also working on a new arrangement with the Property Claims Service to launch exchange traded catastrophe derivatives on the CSX.

A new approach

Behind all of this industry activity, the IMAC has been working tenaciously to promote the Cayman Islands as the go-to domicile for captive insurance companies. American life coach, Tony Robbins aptly said: “If you always do what you always did, you will always get what you have always gotten,” so this year, IMAC took a fresh look at how we were communicating to the world and decided we needed a new approach.

"We plan to remain the premier forum for those interested in captive insurance to discuss the trends in the industry, the challenges, best practice and to plan for the future."

We recognised that we face challenges in delivering our messages to a broad audience globally—from governments, regulators, industry participants and captive owners (and potential owners)—to the general public, who are often sorely misinformed by another stakeholder, the media. We thought that Cayman Islands. Clearly Better Business encapsulated what we wanted to say about this jurisdiction, which has a long history of business success.

Breaking this down might aid in understanding the thinking behind this positioning statement. Clearly makes subtle reference to the transparency of the jurisdiction and its tireless efforts in being at the forefront of international regulatory initiatives. Clearly also inspires people to reconsider preconceived notions they may have had about Cayman.

Better is a nice word. It is confident, yet approachable. It underscores the point that Cayman has plenty of good things going for it.

And, of course Business speaks to the high quality client portfolio of the Cayman Islands—an enviable list of some of the world’s leading financial institutions, global corporations and governments—which have a healthy respect for the innovation and quality that have made Cayman a leading domicile for insurance and business.

At the time of writing, planning for this year’s Cayman Captive Forum is in full swing. We are ahead of pace in terms of registrations, making us hopeful that we will surpass our previous record. The Forum is now the world’s largest captive insurance conference and with an expected attendance of 1,300 delegates, we plan to remain the premier forum for those interested in captive insurance to discuss the trends in the industry, the challenges, best practice and to plan for the future.

We invite you to join the many conversations going on in our social media channels—follow us on LinkedIn and Twitter (@caymancaptive) and like us on Facebook to get the light-hearted side of IMAC.

As I contemplate the new year (already!) I am proud of the accomplishments of IMAC in 2013 and I am encouraged that there is more still to come.

Rob Leadbetter is chairman of the IMAC. He can be contacted at: