CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.
  1. Front Page
  2. News By Topic
  3. Cayman's Reinsurance Legislation Is Progressing

Cayman's Reinsurance Legislation Is Progressing

by Amanda Banks,, London

19 September 2006

After becoming the second-largest captive insurance market, the Cayman islands now plan to emulate Bermuda's success in the offshore reinsurance sector.

A government spokesperson said last week that recommendations for legislation, which had been put out for consultation in June, were now being considered by the Legislative Assembly.

The Cayman Islands Monetary Authority, which established the Insurance Law Review Working Group, submitted the report to the Government in early June.

Apart from introducing a new category of licence for reinsurers, the recommendations are designed to increase consumer protection, facilitate more in-depth supervision of some categories of licensees, attract new categories of international insurance business and provide more flexibility in structuring certain entities, among other things.

The recommendations include setting more precise provisions to enhance 'ring fencing' requirements applied to approved external insurers. Ring fencing requirements were introduced in 1997 to ensure funds were available to meet the local liabilities of external insurers licensed to provide cover in Cayman.

Amendments also explicitly exclude certain activities from the definition of insurance business and set new requirements for capital adequacy and solvency for all licensed insurers.

There are also recommendations for the introduction of a 'place of business' provision for brokers, and special provisions for insurers established as Segregated Portfolio Companies under the Companies Law.

The working group was set up by the CIMA Board in 2004 to review and make recommendations on the legislation, taking into consideration the particular business environment of the Cayman Islands and current international standards. The group comprised persons from the industry, selected for their knowledge and expertise in the insurance markets, and CIMA staff.

The team took into consideration the Core Principles of the International Association of Insurance Supervisors (IAIS), the recommendations of the IMF following its review of Cayman, the laws of several other jurisdictions, and the findings of CIMA's Insurance Task Force and the Review of the Domestic Insurance Industry Post Ivan.

In 2005, the Cayman Islands witnessed the formation of an open market reinsurer, Greenlight Re with approximately US$250 million in capital. "Greenlight Re is the first Cayman-based global property and casualty reinsurance company and has worldwide reach, specializing in custom tailored reinsurance solutions. We anticipate that during 2006 interest in utilising Cayman as a domicile for such vehicles will continue," observed a CIMA official.

Currently the Cayman Islands insurance sector is regulated under the Insurance Law 1979 as amended, most recently in 2004. Class A insurance licenses cover domestic insurance in Cayman itself; Class B licenses cover Cayman or (registered) foreign companies conducting external business; restricted Class B licenses are for captives.

Legislation in 1998 introduced a Segregated Portfolio Company Law. The SPC is an exempted company which may create one or more segregated portfolios in order 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. As originally passed, SPCs were available only to certain types of insurance company, but 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 Cayman Islands has the second-largest captive insurance community in the world, after Bermuda. Cayman's captive insurance sector continued to grow in 2005, with 733 Cayman-licensed captives active at 31 December, according to March, 2006, figures from CIMA. Total assets of the 733 captives active at year end 2005 amounted to US$26.6 billion. Premiums written by these entities equalled US$6.7 billion.

To see today's news, click here.


Tax-News Reviews

Cyprus Review

A review and forecast of Cyprus's international business, legal and investment climate.

Visit Cyprus Review »

Malta Review

A review and forecast of Malta's international business, legal and investment climate.

Visit Malta Review »

Jersey Review

A review and forecast of Jersey's international business, legal and investment climate.

Visit Jersey Review »

Budget Review

A review of the latest budget news and government financial statements from around the world.

Visit Budget Review »

Stay Updated

Please enter your email address to join the mailing list. View previous newsletters.

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.

To manage your mailing list preferences, please click here »