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Saint Kitts: Offshore Business Sectors

Insurance

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

Non-domestic insurance and assurance businesses must be licensed under the Insurance Act. The Federation's 1997 Financial Services (Regulations) Order set the following minimum net assets for applicants wishing to engage in insurance business: long-term and general insurance business, ECD810,000 (USD300,000), reduced to ECD540,000 (USD200,000) for long-term but not general insurance, and further lowered to ECD270,000 (USD100,000) for general but not long-term insurance.

In July, 2004, the Nevis Ministry of Finance and Development in Nevis announced the passage of the Nevis International Insurance Ordinance. The Ordinance is divided into six sections, and provides for the licensing and regulation of general insurance, captive insurance and reinsurance companies. It is compulsory for insurance companies to have a physical presence in Nevis, whether via a resident manager or a fully trained registered agent, with adequate knowledge and experience of the insurance industry.

In 2006, lawmakers on Nevis approved an amendment to the jurisdiction's insurance law that clarified and tightened up certain sections of the legislation to combat fraud. The Nevis International Insurance (Amendment) Ordinance, 2006 updated the Nevis International Insurance Act of 2004, and, according to then Premier Vance Amory, was drafted to "eliminate loopholes which could be exploited by persons who do not really care what they do in international business."

In June 2006, Saint Kitts and Nevis Prime Minister and Minister of Finance, Dr Denzil Douglas, revealed on a promotional trip to Switzerland that the government would soon introduce captive insurance legislation. According to Douglas, the new captive insurance vehicle would be "extremely competitive", with low licence fees for small captives.

The Captive Insurance Companies Act received the assent of the Governor General on August 16, 2006. Under the Act:

  • Captive insurance companies are subject to the provisions of sections 7, 8, 9, 10 and 11 of the Act and to the provisions of Part I of the Insurance Act, 1968.
  • Except for an association captive insurance company which shall be either a stock insurer or a mutual insurer, a captive insurance company may be formed in the State as any type of entity authorized under the Companies Act, 1996.
  • A captive insurance company shall have at least two directors or managers.
  • A captive insurance company formed for the purpose of underwriting insurance risks within the State, or within and outside the State, shall have at least one director or manager who is a resident in Saint Kitts and Nevis.
  • A captive insurance company shall not adopt a name that is the same, deceptively similar, or likely to be confused with or mistaken for any other existing business name registered in the State.
  • A captive insurance company shall not do any insurance business in or from within the State unless:
    • it applies for and obtains from the Registrar a license authorizing it to conduct insurance business in or from within the State;
    • it maintains a registered office in the State; and
    • it appoints a registered agent to accept service of process and to otherwise act on its behalf in the State.

A captive insurance company formed or registered in the State, may when permitted by its articles of association, charter, or other organizational document, apply to the Registrar for a license to issue any and all classes of insurance referred to in section 3(1) of the Insurance Act, 1968, except that:

  • a pure captive insurance company may not insure any risks other than those of its parent and affiliated companies or controlled unaffiliated businesses;
  • an association captive insurance company may not insure any risks other than those of the member organizations of its association, and their affiliated companies;
  • a group captive insurance company may not insure any risks other than those of its parent, owners and affiliated persons, provided, however, that not more than one-third of its insurance business may involve risks of unaffiliated persons;
  • a captive insurance company may not provide personal motor vehicle or homeowner’s insurance coverage or any component thereof;
  • a captive insurance company may not accept or cede reinsurance except as provided in section 16 of the Act; and
  • a captive insurance company may provide excess workers’ compensation insurance to its parent and affiliated companies, unless prohibited by the law of the state or country having jurisdiction over the transaction.

An application for a licence by a captive insurance company must be made to the Registrar in the prescribed form accompanied by:

  • a certified copy of the captive insurance company’s organizational documents, a statement under oath of its president and secretary, or, if none, its directors or managers, showing its financial condition;
  • a description of the captive insurance company’s three year business plan including coverages, deductibles and coverage limits, together with such additional information as the Registrar may reasonably require to enable him to assess and approve the business plan; and
  • evidence of the following:
    • the amount and liquidity of its assets relative to the risks to be assumed;
    • the adequacy of the expertise, experience, and character of the person or persons who will manage it;
    • the overall soundness of its plan of operation;
    • the adequacy of the loss prevention programs of its insureds;
    • minimum unimpaired capital and surplus as specified in section 14;
    • any other information deemed relevant by the Registrar in ascertaining whether the proposed captive insurance company will be able to meet its policy obligations;
    • and a non-refundable application fee of ECD1,620.

There is a license fee of ECD8,100 for the year of registration and a renewal fee for each year thereafter of ECD8,100.

However, the licence fee for a 'small captive insurance company' is ECD2,160 for the year of registration and ECD2,160 annually thereafter.

A 'small captive insurance company' means a captive insurance company with annual net written premiums, or, if greater, direct written premiums, not exceeding ECD4,050,000.

A small captive insurance company may apply for a license in a prescribed simplified form.

Nevis enacted new insurance legislation in 2009 with the Insurance Act. See the Table of Statutes under Law of Offshore for more detail.

 

 

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