GEORGE TOWN, Grand Cayman--(BUSINESS WIRE)--The captive insurance industry in the Cayman Islands is booming.
The Cayman Islands Monetary Authority (CIMA) has reported that it received 67 applications for new licenses in 2012, with 52 licenses granted and the remainder scheduled for approval in 2013. Since 1 January 2013, one license has been approved and another 11 have been approved in principle. The total number of new licenses accounts for an increase of more than 58% over 2011 and is the biggest year for captives since the hard market of 2004.
Although Cayman may be largely known as being a healthcare captive domicile, the 52 new formations came from various sectors including healthcare, life reinsurance, P&C reinsurance, manufacturing and technology. A number of group captives were also formed as segregated portfolio companies.
Existing Cayman captives also dramatically grew their assets. Total premiums written by captives were reported at US$11.8 billion and total assets under management climbed to US$88.1 billion, their highest ever levels, which grew 24% and 51% respectively.
“Cayman understands the captive insurance business and the role it plays in the risk management space, and when I say Cayman, I mean the industry together with the regulator,” said Rob Leadbetter Chairman of the Insurance Managers Association of Cayman (IMAC). “These statistics are not surprising to us, because we have been building our core competencies over decades to make Cayman the ‘go to’ domicile in the insurance industry.”
There are some 5,000 captives globally and since 1980, 3,095 captives have been licensed in the Cayman Islands. The Cayman Islands remain a very popular jurisdiction for captive formations, which including the 780 segregated portfolios, is close to 1,500 entities. This popularity is attributable to a combination of sensible legislative framework, the relationship between IMAC and CIMA, together with a harmonised regulatory environment.
With the new Insurance Law now in place, Cayman expects to welcome even more insurance business to its shores. The new law is designed to clearly differentiate between the domestic and international insurance markets in the Cayman Islands and to regulate each in accordance with its own requirements. It strengthens legislation to protect Cayman entities and brings the law formally into line with international standards. And finally, it sets out a framework to develop the reinsurance market and to create a clearer understanding for the insurance linked securities (ILS) market. Most importantly, it embraces the concept of ‘proportionality’ and addresses entities based on the nature, scale and scope of risk.
Insurance Managers Association of Cayman (IMAC) is a non-profit organisation run by the insurance managers of the Cayman Islands. In operation since 1981, IMAC’s aim is to act as both regulatory liaison with the Cayman Islands Government and to promote the Cayman Islands as a domicile of choice for captive insurance companies.
IMAC hosts the world’s largest captive insurance conference, attracting nearly 1,300 captive managers, service providers and directors annually.