Stability and innovation define Cayman captive sector

The Cayman Captive Forum’s first day closed with a comprehensive annual regulatory and industry update designed to offer a snapshot of a jurisdiction that has largely stabilised after a decade of transformation, yet continues to adapt to global standards, international expectations and shifting market needs.

The session was delivered by Tim Dawson, partner, Campbells; George Kamau, deputy head - Insurance Supervision Division, the Cayman Islands Monetary Authority (CIMA); and Ric Agrella, partner, PwC partner.

Dawson opened by reflecting on the extensive period of regulatory flux between 2013 and 2020. During those years, the Cayman Islands introduced FATCA and CRS reporting, reformed its anti-money laundering (AML) framework, implemented economic substance requirements, enacted a Data Protection Act, expanded beneficial ownership reporting, and rolled out crypto-asset regulation. The most significant change for the financial services sector during that period was the requirement introduced in 2020 for private funds to register with CIMA, a regime largely driven by EU expectations. Since then, private fund registrations have grown from roughly 12,400 to more than 17,000, underscoring Cayman’s continued appeal even amid heightened regulatory oversight.

Dawson emphasised that the last five years have brought far more stability, with only incremental regulatory adjustments. This relative calm is welcomed by market participants, even if it leaves regulatory specialists like him with fewer seismic developments to dissect. Nevertheless, one area currently under consultation—the draft rules and guidance on actuarial valuation—does represent a meaningful update. Triggered by changes to the International Association of Insurance Supervisors’ (IAIS) core principles, the consultation proposes a shift from a minimum-standards approach to a risk-based, principles-focused and economically consistent valuation framework.

The proposed rules preserve core exemptions (including for ILS vehicles and most non-life captives) but introduce more detailed expectations around uncertainty margins, reinsurance, data governance, contract boundaries, discounting, stress testing and peer review. Dawson explained the distinction between binding rules and non-binding guidance, noting that although guidance is not directly enforceable, CIMA will consider it when assessing compliance with the rules. He encouraged industry participants to engage with the consultation, whose deadline has been extended to February 2026.

Looking to the wider regulatory horizon, Dawson highlighted the Cayman Islands’ preparations for the 2027 FATF mutual evaluation. Following the 2018 assessment, Cayman was placed under FATF’s increased monitoring and removed only in 2023 after significant effort by both public and private sectors. The upcoming evaluation will prioritise demonstrated effectiveness, particularly around AML, counter-terrorist financing, proliferation financing and beneficial ownership transparency. Dawson expects extensive engagement with industry throughout 2026 as Cayman works to maintain its strengthened global standing, including its seat on the FATF Steering Group.

CIMA’s George Kamau expanded on current market dynamics, noting robust licensing activity in 2025. As of mid-November, 36 new insurance licences had been issued, evenly divided between captives and commercial entities. Notably, Class D reinsurers continue to migrate to Cayman from other offshore jurisdictions, reflecting confidence in the jurisdiction’s supervisory framework.

Group captives are a growing segment, as industry sectors such as transportation and construction are increasingly turning to group structures to manage risk collectively. Workers’ compensation, general liability and auto insurance remain the dominant lines of business for new formations. Business interruption coverage is also rising in prominence, driven by geopolitical instability, supply-chain disruption and hardening commercial markets.

Kamau noted that reinsurance continues to be one of Cayman’s fastest-growing sectors, with more than 15 applications under review. Looking ahead to 2026, several regulatory enhancements are anticipated, including a new Class B4 licence for larger commercial entities, an MGA (managing general agent) licence category, and an insurance broker licence. These changes support CIMA’s transition to risk-based supervision and respond to the growth and sophistication of Cayman’s insurance market.

PwC’s Ric Agrella provided an accounting-focused perspective, observing that while recent US GAAP updates have had limited impact in Cayman, the CECL credit-loss standard has occasionally affected captives with reinsurance receivables. He stressed the importance of revisiting counterparty credit risk—especially in stressed scenarios—to ensure appropriate provisioning and regulatory capital compliance.

Agrella also discussed key market trends shaping captives in 2025: diversification of coverages (including cyber), increased limits in medical professional liability, adoption of data analytics and AI, the growing appeal of parametric products, adverse development particularly in auto liability, and the rise of medical stop-loss and group captives. Parametric products, he noted, have become increasingly relevant, as illustrated by rapid hurricane-related payouts in the region.

Looking ahead to 2026, Agrella expects continued regulatory enhancements, growth in cyber and climate-related coverages, expansion of reinsurers in Cayman—especially P&C-focused entities—and ongoing innovation as captives address protection gaps created by macroeconomic and geopolitical challenges.

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