The Cayman Islands Insurance Law 2010 went into force 1 November 2012 after an order made in cabinet earlier in the week. The latest amendments to the law were based on recommendations from a public/private sector Insurance Working Group and the International Monetary Fund.
The Cayman Islands Insurance Law 2010 clearly delineates four separate classes of insurance and has specific regulations for each class.
The current Class B licence, which is now dedicated to captives, has been split into three further sub-categories, each distinguished by the proportion of net-premiums written which originate from the insurer’s related business (Class B(i) 95 percent+ related business, Class B(ii) 50 percent+ related business and Class B(iii)50 percent- related business).
Capital requirements will vary depending on the sub-class of the Class B licensee. This sub-division brings more clarity to this category and provides flexibility to the type of business a Class B licensee can underwrite.
The Class C licence is a new Class and is dedicated to reinsurance arrangements financed through the issuance of cat bonds and similar instruments. The law recognises the structured nature of these arrangements, how they function in practice and what all participants, including sponsors and investors, expect from such transactions. For example, the description of the Class C insurer specifically references such essential concepts as “limited recourse” and funding through the issuance of bonds or other instruments.
Class D is specifically for traditional commercial re/insurers and has been created to support the jurisdiction’s objective of attracting reinsurers to the islands. As the Cayman Islands is acknowledged as the leading offshore domicile for hedge funds, there is a natural market for this business and the Government has committed to facilitating reinsurance set-ups in many respects and is actively engaging with industry in this regard.
These amendments include the availability of ten-year work permits for executives and managers in the reinsurance industry and free work permits for various categories of administrative staff for their first five years of residence in the islands. In addition, permanent residence with the right to work is now available to approved persons who make a substantial investment in a home or other developed real estate.
Among other amendments contained in the law is a strengthening of protection for whistle-blowing insurance managers and auditors.
“The introduction of this law is welcomed by the Cayman insurance industry as it underscores the pro-business nature of the jurisdiction for its historic captive insurance base and enhances its attractiveness for ILS vehicles and the reinsurance sector,” said a release from the Insurance Managers Association of Cayman (IMAC).
