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Cayman Islands: Offshore Business Sectors

Insurance

This page was last updated on 28 June 2019.

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

The Cayman Islands insurance sector is regulated under the Insurance Law 1979 as amended and revised in 2004 and 2008. Class A insurance licences cover domestic insurance in Cayman itself; Class B licences cover Cayman or (registered) foreign companies conducting external business; restricted Class B licences are for captives. Applications for licences are made to the Cayman Islands Monetary Authority (CIMA). See Law of Offshore and Offshore Legal and Tax Regimes for further details of the licensing regime, minimum capital requirements and fee levels.

The segregated portfolio company (SPC), introduced in 1998, is an exempted company which may create one or more segregated portfolios to segregate the assets and liabilities of the company held within or on behalf of the portfolio from the assets and liabilities of other portfolios. In 2002 amendments extended the provisions relating to segregated portfolios to any exempted company. In essence, the new law provided that any new company may apply to be registered as a segregated portfolio company. A segregated portfolio company must pay additional fees and must provide notice to the Registrar of the names of all segregated portfolio accounts created.

The changes allow an existing company to convert into an SPC, although a number of criteria will need to be met, including the written consent of each creditor of the company and the approval of CIMA. An SPC is also able to create separate portfolios by reference to a series of shares, as well as by reference to separate classes of shares.

The improvement to the SPC structure, adopted from Guernsey legislation, ensures that there is no 'flow over' from an insolvent cell to general assets. A key change for mutual fund issuers is a provision that secured creditors are able to enforce their security against a segregated portfolio, despite the existence of a receivership order against that portfolio. This ensures that a segregated portfolio is acceptable to - and can be rated by - the rating agencies in the same manner as an exempt company.

There were a total of 750 Class B companies under the supervision of the Insurance Supervision Division at the end of June 2013, nine more than at the end of 2012. Pure captives and segregated portfolio companies represent the two main categories of Class B entities, with 412 and 134 companies respectively.

In June 2008, the Cayman government elaborated on planned measures that would be taken during the 2008/09 financial year to further develop the reinsurance sector in the Cayman Islands. The measures are based on recommendations submitted to government on 23 April 2008 by the Reinsurance Task Force (RTF).

The RTF's recommendations focused on promoting commercial certainty for prospective reinsurance firms, specifically through provisions in Immigration Law via the business staffing plan regime, as well as progressive approaches to the regulation of reinsurance companies in Insurance Law.

The RTF also recommended that reinsurance firms who wished to take advantage of the Cayman Islands as a location enter into a "social contract" with the government on career, education and training opportunities for Caymanians, reflecting a partnership approach to joining the Cayman Islands financial services community.

The RTF comprises senior and experienced figures in the Cayman Islands insurance industry familiar with the reinsurance sector as well as members from government's Financial Services Council.

 

 

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