Risk location of captives continued to be dominated
by North America, which accounts for 90 percent of
the Cayman market, followed by the Caribbean &
Latin America at 3 percent, Europe at 2 percent, and
the remaining global market at 5 percent.
In addition, Cayman is home to nearly 10 portfolio
insurance companies (PICs), which are standalone entities
within a segregated portfolio company (SPC) structure. PICs are
innovative and have more flexibility than a segregated portfolio. Unlike
segregated portfolios, they have their own board and can contract
with other PICs. A PIC can also transition to a standalone insurance
company separate from its SPC.
The international re/insurance market also continues to grow due
to new formations and expansion of existing companies. As of 30
September 2017, the industry gained 24 new re/insurers, making a total
of 705 international re/insurers.
As a leading jurisdiction for healthcare captives, the market currently
attracts more than 40 percent of companies which are writing medical
malpractice and professional indemnity as their primary line of business.
Impact of financial assessment
In February 2012, the Financial Action Task Force (FATF) adopted
the revised international standards on anti-money laundering (AML)
and combating the financing of terrorism (CFT) and proliferation,
commonly referred to as the ‘40 Recommendations’. The updated 40
Recommendations introduced a new concept to the standards known
as the risk-based approach. This concept resonates throughout the
standards and has an impact on the jurisdiction at large, including
persons conducting relevant financial business and competent
authorities such as CIMA.
As part of the Caribbean Financial Action Task Force (CFATF)
assessment in December 2017, the Cayman Islands will be
assessed against these standards as well as the Methodology for
Assessing Technical Compliance and Effectiveness with the FATF
The insurance industry of the Cayman Islands will form part of the
scope of the assessment. As part of its efforts in AML/CFT, CIMA utilises
a risk-based approach to ensure that our licensees are appropriately
supervised in accordance with relevant laws, regulations, rules,
guidance notes and international standards.
Under this concept, licensees are obligated to identify and monitor all
related risks. Licensees must ensure that they maintain accurate and
effective policies and procedures and records, provide training to staff,
14 cayman captive 2018
agents and intermediaries and conduct their own
internal risk assessments with the aim of monitoring
and controlling such risks on an ongoing basis.
Given that the risk-based approach concept
is a key facet to the AML/CFT regime, CIMA
has engaged in stakeholder dialogue sessions
to ensure that industry stakeholders understand and adopt this
model in their relevant financial business activities.
The authority is confident that the growth outlook of the insurance
industry in the Cayman Islands will remain positive. The jurisdiction is
continually attracting new insurer licensees and insurance companies
which include startup operations seeking to redomicile to the Cayman
Islands from other jurisdictions.
Recent market trends suggest that a large number of re/insurance
buyers are seeing the benefits of owning or using captive insurance
vehicles to take advantage of their risk mitigation. There has also been
a shift in new captive re/insurance company formations, with more and
more companies assuming unrelated and non-traditional risks.
Changes made to the Insurance Law, including the supporting
regulations and the regulatory framework within the last few years, have
also had a positive impact on the insurance industry. As a result, insurance
groups, and hedge funds in particular, have chosen the Cayman Islands
as a domicile to establish their re/insurance subsidiaries.
Despite the changes in the US healthcare system by way of mergers
and acquisitions, it is encouraging to see the formation of new
healthcare captives companies to write traditional med-mal liability
insurance, as well as non-traditional risks such as cyber risks and
medical stop loss.
It is evident that decades of the Cayman Islands’ expertise, regulatory
framework, and longevity of the captive industry have contributed to the
overall success of Cayman’s financial services industry. As such, CIMA
is confident that the insurance sector is well positioned to experience
The authority will continue to work with the relevant parties in
preparing for the upcoming assessment to ensure that the Cayman
Islands remains compliant with the FATF Standards, while ensuring
that the Cayman Islands maintains its position as a leading world-class
jurisdiction for offshore insurance.
“THE INTERNATIONAL RE/INSURANCE MARKET ALSO CONTINUES TO GROW
DUE TO NEW FORMATIONS AND EXPANSION OF EXISTING COMPANIES.”