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Barbados: Offshore Business Sectors

Insurance

See Offshore Business Review – Insurance for a more general treatment of captive insurance companies.

The Barbados insurance sector is regulated under the Exempt Insurance Act 1983. The Ministry of Finance and Economic Affairs is responsible for the insurance sector, and day-to-day supervision is in the hands of the Supervisor of Insurance. Entities involved in insurance are licensed by the Minister under the Act.

More than 230 insurers are licensed under the Act, with annual premiums of approximately USD2bn and assets of USD10bn. A majority of these insurers originate from the US, and are taking advantage of the provisions of the Barbados/US Double Tax Convention, which are not available to insurers located in the other main Caribbean jurisdictions. The Convention allows captives and other insurers in Barbados to write business in the US while avoiding the creation of a permanent establishment, and thus to escape much US taxation. See Offshore Legal and Tax Regimes for details of the tax benefits available to offshore insurers; also see Double Tax Treaties.

The Act defines exempt insurance as the business of insuring risks outside Barbados by a company which is not owned by persons resident in Caricom. An applicant for a license under the Act must:

  • be incorporated under the Companies Act 1982 as a limited liability company or as a mutual insurance company (see Forms of Company);
  • carry on only exempt insurance business;
  • have at least one resident Barbadian citizen as a director;
  • have only shareholders who are resident outside Caricom;
  • must have minimum issued capital (or reserves, in the case of a mutual insurer) of BDS250,000.

The captive insurance industry is growing in Barbados. Rent-a-captives are permitted, and there is provision for 'segregated account' companies.

Solvency rules are as follows:

Premium income
Solvency Requirement
First year
Net assets BDS250,000
Below BDS1.5m in previous year
Net assets BDS250,000
Between BDS1.5m and 10m in previous year
Net assets 20% of income
Above BDS10m in previous year
Net assets BDS2m plus 10% of income over BDS10m

Licenses are issued to insurers as such; holding companies and management companies involved in offshore insurance business must register with the Supervisor of Insurance. Licensees and registrants pay an application fee of BDS500.

License fees were raised in the 2008 budget, with effect from January 1, 2009, from BDS5,000 to BDS20,000 per annum.

 

 

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