By Emma Parker
The Cayman Islands is a jurisdiction of choice for captive insurance companies and reinsurers worldwide. The Insurance Managers Association of Cayman (IMAC) is an association representing the international insurance industry in the Cayman Islands and its chairman Colin Robinson, and the rest of the executive committee of IMAC, work to ensure the industry continues to thrive by being responsive, taking a commercial approach to market needs and encouraging innovative new legislation to be developed where market opportunities arise.
Cayman and its international insurance industry’s success is in no small part attributed to the jurisdiction’s deep, collective experience, which has served captive companies for more than 40 years. Nowhere is this better demonstrated than around the IMAC boardroom table.
EP: Can you explain IMAC’s role and your role within it?
CR: IMAC is the association of insurance managers in the Cayman Islands. Our membership consists of large, medium and small manager firms, as well as service providers who support our industry, such as banks, audit firms, actuaries and law firms. Our role is to promote the jurisdiction as a leading domicile for captive and reinsurance business; to host the Captive Forum, which is the largest captive insurance conference in the world; to work in consultation on draft bills and legislation with Government that continue to keep Cayman at the forefront of the international insurance industry; to educate our members and the community through seminars and training on industry-specific topics, which ensure we remain at the leading edge of our business; and finally to market the industry and globally and locally. Some of our members are smaller managers and appreciate the opportunity to take a ‘team Cayman’ approach in our marketing efforts.
EP: In a recent news release, Cayman reported the largest increase in captive insurance company formations since 2017 in the past year, with 36 new captive insurance companies formed. What has led to this growth?
CR: Globally, it is currently a ‘hard market’ for insurance – which means that premium rates are going up (generally between 10 to 20% over the last year, and in some lines of business up to 60% increases, and there is less liquidity and capacity in the market. This drives interest in captives and ultimately interest in Cayman. In many cases, organisations that may have had a captive insurance company in their longer-term plans, have reassessed their risk strategy, having reviewed the market over the last few months (and the premiums going up) and decided to establish a captive sooner.
There are other factors too, Cayman made a decision not to enact regulation for Solvency II equivalency, (an EU initiative) unlike Bermuda, and for the US market that has been very attractive and appears to have given us the advantage for business from that region.
We have also seen a big increase in third-party business – which in Cayman is done through what’s known as a ‘B3’ insurance licensed company.
EP: You also commented that you thought 2021 would be another excellent year of growth, why is this?
CR: Continuation of the trends I talked about earlier will drive growth through 2021. In addition, many captive insurance companies are expanding their roles. So, a captive that may have been formed to serve one service line may expand and get involved in other insurance business lines over time.
EP: What is it about Cayman’s offering specifically that is bringing about growth?
CR: It comes down to talent and expertise. A client might use Cayman for one aspect of their business, and they have a great experience, and this leads to expansion and repeat business. The fact that the jurisdiction is well regarded in other industries (hedge funds etc) gives clients significant comfort and abilities for cross selling, as Cayman is a very mature jurisdiction compared to some others. We have been in this business for more than 40 years and clients take a lot of comfort from that; they know we aren’t going anywhere.
EP: What are the challenges that Cayman’s industry faces?
CR: I think Cayman faces the same challenges that many other international financial centres around the world face when it comes to the regulatory pressures. This is not peculiar to Cayman, and as an industry we are well resourced, and we certainly have the talent, knowledge and capacity to deal with the ever-changing landscape. Our open channels of communication and good working relationship with regulators give us a strong platform for success.
Overall, we feel very bullish about Cayman’s prospects and look forward to another strong year ahead.
EP: Healthcare captives are clearly an important vertical market for Cayman’s international insurance industry. How do you see this developing?
CR: There has been some consolidation in the healthcare captive insurance market over recent months, particularly onshore, where we have seen fewer captives but larger captives being created through offshore consolidation. Healthcare captives aren’t going away and this will continue to be an important business line for Cayman. However, we are also seeing diversification in the use of captives into different areas including non-standard auto, medical benefits insurance, life annuity and other niche areas.
EP: What do you see as Cayman’s main competitor jurisdictions?
CR: In many ways we believe that Cayman doesn’t have any direct competition, as each of the largest captive insurance domiciles in the world have very different offerings, serve different geographic markets and specialise in different areas.
Cayman stands out as we have very attractive capital requirements, more flexibility for captive set-ups than is available onshore, a savvy and commercial regulator, a very attractive business environment and we have a tax-neutral advantage. Although, for many Cayman captives, tax isn’t the driving factor, and many elect to pay taxes in the US, despite being in domiciled in Cayman. If you include the high standard of service providers (managers, banks, lawyers, auditors, etc.), our jurisdiction remains one of the premier global destinations for international insurance business.
EP: What plans do you have this year when it comes to marketing?
CR: As for most people, the last year has been a bit different. We haven’t been able to attend face-to-face industry events and conferences, but we have been involved virtually, and we sponsored the conference app for the 2020 American Society for Health Care Risk Management (ASHRM) Conference.
We are very keen to see our annual Captive Forum conference go ahead in 2021 in Grand Cayman, and we are hearing from our key producers in the US how keen they are to be here. Captive Forum is the largest captive insurance event in the world, with over 1,500 attendees, many of them international, and we hope we will be able to welcome our industry colleagues back here come November 2021 – check our website for more information on that.
For more information on the Cayman Islands international insurance industry, visit https://caymanintinsurance.ky.
Camana Bay (Cayman’s leading Class A business centre) is home to a number of leading international insurance industry firms including Aon, Willis Towers Watson, Advantage Insurance, Aureum Re, United International Insurance and Greenlight Re. To join this hub, contact Dart Real Estate for the latest commercial listings. Camana Bay’s newest commercial building, 60 Nexus Way, is now underway and scheduled to complete mid-2022. Offering 200,000 square feet of Class-A office space, the flexible floor plans can easily be adapted to create a variety of professional, creative, productive and stylish workspaces. For more information, email [email protected].
About the author
Emma Parker has worked with Dart since 2019 and has been writing professionally since 1999. Emma graduated from the University of Manchester with a BA (Hons) in 1997, has a post-graduate Diploma in Communications, Advertising and Marketing and a STEP Certificate in International Trust Management. She has worked in PR, marketing and business development roles, primarily in the legal and financial services sector, since 2001. Emma is the founder of Sidekick, a financial services marketing and business development consultancy. She was raised in the UK and has lived and worked in the Caribbean in the British Virgin Islands and the Cayman Islands for over 13 years. Emma has a passion for exotic travel, her family and Newcastle United Football Club.