“CAYMAN’S POSITION AS THE NUMBER ONE HEALTHCARE DOMICILE FOR
CAPTIVES AND SECOND IN TERMS OF OVERALL CAPTIVES REMAINS VERY
STRONG.” SUZANNE SADLIER
There were 327 pure captives and 117 group captives under the
Cayman Islands insurance supervision as of June 30, 2017, while the
overall total captive licensees stood at 701, which also includes 146
SPCs with 603 cells. The Cayman Islands is the leading jurisdiction
for healthcare captives. Medical malpractice liability continues to be
the largest primary line of business with approximately 32 percent of
companies re/insuring medmal, while workers’ compensation is the
second largest with 21 percent of companies assuming this risk.
“From the Cayman Islands Monetary Authority’s (CIMA) perspective,
we are seeing continued growth and having more and more meetings
with prospective licensees including companies who are looking to
re-domicile their captive operations,” said Suzanne Sadlier, deputy
head of CIMA’s insurance division.
“The growth is positive for 2016, we issued 39 new licences. For the
fi rst half of 2017 we issued 17 new licences. Certainly, with regard
to Cayman’s position as the number one healthcare domicile for
captives and second in terms of overall captives remains very strong.
From the trends we are seeing at present, that doesn’t look as though
it will change any time soon.”
“What makes Cayman attractive to captives are the fundamentals
we have built the business on: an entire industry working well together,
providing the types of resources, quality insurance management, in
conjunction with all the other service providers, as well as working
very closely with the regulator,” said Jude Scott, chief executive offi cer
of Cayman fi nance.
For captives, Cayman also offers access to all the ancillary parts of
the business, professional service providers, that help them manage
the risk exposure. Companies have easy access to the regulator who
is willing invest time to understand what they are looking to do, and
also have a balanced regulation in place, Scott added.
While noting that Kensington Management Group works extensively
in the group captive space, executive vice president Erin Brosnihan
noted that group captives have experienced tremendous organic
growth in the last three years.
“On average we are adding approximately 300 member insured
companies per year, and we don’t expect any slowdown in growth in
the near term,” Brosnihan said. “The sweet spot for the group captive
market is mid-size, well run US companies and we feel that the market
is largely untapped at the moment, so signifi cant opportunities for
growth still exist.”
20 cayman captive 2018
Regarding the biggest changes the sector has seen in recent years,
Haddleton said that the greatest challenge has been the effort to
ensure that the risk-profi ling of the sector is taken into consideration
in rules, regulations and laws required to counter money-laundering
(ML), terrorism fi nancing (TF) and other crimes.
“The captive sector largely assumes related party risks and does
not possess the same vulnerabilities to ML and TF activities in the
way areas such as banking or mutual fund management do. Nor
does the captive sector pose systemic risk to the remainder of the
fi nancial sector.”
While noting that unfortunately, claims of applying proportional, riskbased
regulation, from banks, reinsurance companies, regulators,
etc, are sometimes hollow, Haddleton noted that the requirements for
due diligence need to be examined for the value they will add to the
assessment. “If they would not add value, much time and expense
would be saved by a more fi ltered approach. The entire process
would be more effi cient and valuable,” she said.
PwC director Melanie Snyman described the biggest changes in her
view as being the consolidation and merging of healthcare captives
in the US. “We have seen captives either merge, re-domicile out or
in, or liquidate.
“We continue to service our healthcare clients and look for new
opportunities to expand their programmes. I don’t see it as a negative
in that respect,” she explained.
Glen Trenouth, managing partner at BDO Cayman Islands added:
“We’ve seen an increase in competition by virtue of a growing number of
onshore jurisdictions, and dealing with the rhetoric around the legitimacy
of the offshore ones. Cayman has responded by mainly continuing doing
what we do best, while building on our past success in terms of
innovations and quality.”
Trenouth noted that the captive industry in Cayman has resisted the
urge to venture into sometimes controversial captives products.
“While they may have promised opportunity for growth in our
market, they are potentially unstable and questionable in terms of
their legitimacy and usefulness,” he explained.
Captive insurance has been driven particularly by traditional sources
and while this is good, it is time for Cayman to make inroads to new
markets, Haddleton said.