“EY IS DEDICATED TO THE CAYMAN ISLANDS INSURANCE
CAPTIVE PRACTICE AND THIS FOCUS HAS INCREASED WITH
OUR GLOBAL CAPTIVE PLATFORM.”
The Cayman Islands has maintained this robust regulatory environment
while maintaining an ability to be nimble and agile, which positions the
Cayman Islands well compared to other jurisdictions.
The Cayman Islands is commonly referred to as a tax-neutral
domicile. The economy relies on tourism and financial services, and
its infrastructure is funded by a government revenue plan that heavily
relies on direct taxation revenues from hotel tourism, as well as significant
duties levied on all imports. As such, no corporate income taxes exist in
the Cayman Islands.
The Cayman Islands has a stable government, with ongoing UK
stewardship by the islands’ governor, an appointment made by the
UK government to represent HM Queen’s interests in one of its British
The Cayman Islands’ proximity to the US adds to the attraction of
investors from North America, and is an enjoyable as well as efficient visit
for the US business traveller. The warm year-round climate and beautiful
beaches, combined with outstanding hotels and meeting facilities, is
another key attraction.
The local financial services infrastructure is extremely well established
over a number of decades dating back to the 1960s. Many major law,
accounting and other service provider organisations have established and
grown here, and with that so has their expertise in all facets of offshore
financial services business. Such a proven track record helps satisfy many
of the concerns of many potential investors in the Cayman Islands.
Why have so many captives set up shop on Cayman?
In addition to a robust and internationally-recognised regulation, tax
neutrality, government stability, local professional expertise, and a proven
successful track record in the captives industry, the Cayman Islands also
has some of the most experienced and trusted captive management
organisations, accounting firms, insurance advisors, and financial
EY is dedicated to the Cayman Islands insurance captive practice
and this focus has increased with our Global Captive Platform. With our
Global Captive Platform, EY is dedicated to providing a full suite of services
including advisory, assurance, regulatory and risk, tax, and transaction
Where does Cayman stand when compared to other captives
We believe Cayman is in the top three, the others being Bermuda
and Vermont. With its core business of medical malpractice, workers’
compensation, and group captives, Cayman continues to present
opportunities for companies that are seeking an efficient capital and tax
58 cayman captive 2018
structure, with a strong and nimble regulatory regime that is proactive in
reviewing new and developing products.
Cayman continues to be an early adopter of concepts beneficial to
the evolution and development of captive insurance programmes to
meet the needs of their users. As an example, in May 1998, Cayman
became one of the first jurisdictions to pass segregated portfolio
company (SPC) legislation.
This formalised the old rent-a-captive models into a ready-made legal
structure that could further reduce the costs of maintaining a captive
Roll forward to new 2015 legislation, and the SPC concept evolved further
into a new structure known as a portfolio insurance company (PIC), which
enables entities within the PIC to transact business with each other. Again,
Cayman became one of the first jurisdictions to introduce such structures.
Successful and timely initiatives such as these will help maintain
Cayman’s position in the group of leading global domiciles for captives.
How has the Cayman government acted to protect its position
as a captive domicile?
Government has increased funding to the Cayman Islands Monetary
Authority (CIMA) in recent years. This has addressed resource needs,
as well as being used for continued marketing efforts. FATCA and CRS
requirements have been addressed such that cross-border transactions
can flow without penalty.
Legislative change occurred in 2010 when the Insurance Law was
overhauled, and work is already underway to consider further legislative
changes that will be beneficial to the Cayman Islands reinsurance and
captive insurance industries. The aim is for both to co-exist under fair,
proportionate and consistent regulation.
How have the Cayman regulators acted to support the domicile?
The Insurance Supervision Department at CIMA has expanded its resources
significantly in recent years with a number of important appointments being
made throughout the department to bolster headcount and to improve the
quality and timeliness of communications with insurance managers and
their licensees. We are hearing very positive reactions from clients and
others on the responsiveness of CIMA and their focus on the regulation of
the businesses in the Cayman Islands.
David L. Brown is senior partner, financial services at EY. He can be
contacted at: email@example.com
Ian Lomas is partner, financial services at EY. He can be contacted
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