With a revised legislative regime to come early in 2015, the British Virgin Islands is optimistic that its captive numbers will continue to grow, according to Stanley Dawson of the British Virgin Islands Financial Services Commission..
A major selling point of the BVI is its level of regulation. What has come into effect recently that is benefitting the domicile, or what is in the pipeline?
The current British Virgin Islands (BVI) legislation, the Insurance Act, 2008, Insurance Regulations, 2009, Regulatory Code, 2009 (as amended), and the BVI Business Companies Act, 2004 (as amended), allow for the formation and licensing of BVI business companies to carry on insurance business as any type of captive, from a pure captive to a segregated portfolio company, with independent separation of each of its segregated portfolios or cells. A captive may write either general or long-term business including, reinsurance that is not open market reinsurance business, if it is so licensed by the Financial Services Commission.
There are amendments currently being considered that will enhance and make more user-friendly the existing legislation, including specific legislation relating to pure captives and captives that write some third-party business.
Have the plans to implement a tiered licence fee structure come to fruition yet?
The policy has been agreed in principle and finalisation is now awaiting completion of the amendments to the Insurance Act and Insurance Regulations.
The hope is that this process will be completed within the first quarter of this year, and certainly not later than the second half, and it will most certainly be welcomed by the industry.
Should the structure be approved, it will be based on the annual gross written premiums (GWP) of the captive in the previous financial year. There are approximately five tiers being considered for calculating fees.
The first tier will be applicable to those with GWP of $500,000 or less, moving up to between $500,001 and $999,999 for the second band. The next tier up will be for captives with GWP of between $1 million and $4,999,999.
The penultimate tier will be for captives with GWP of between $5 million and $9,999,999, while the final tier will be reserved for entities with GWP of $10 million and above—the highest fee level. Since the structure has not yet been approved, we cannot at this time indicate specific fees for each level.
What are the BVI’s current initiatives to attract new captive managers and reinsurers?
The marketing of the jurisdiction is the function of the International Finance Centre, which has been actively promoting the BVI as a jurisdiction of choice for captive insurer formations and redomiciliations. This includes the formation of BVI business companies to carry on insurance as captive insurance managers, especially when attending conferences, and to carry on reinsurance business.
However, the proposed amendments to the Insurance Act and Insurance Regulations should usher in a more flexible and user-friendly regime for the formation of captive insurance companies, in addition to enabling companies to undertake more than one type of insurance business (if certain conditions are met).
The islands are home to corporate services providers, insurance managers, insurance intermediaries, loss adjustors, auditors, legal advisors and other professionals, as well as a few banks that provide services to the insurance industry.
Have agreements on tax information exchange affected business and do you know of any more planned in the future?
There is no evidence to indicate that tax information exchange agreements (TIEAs) in relation to the captive insurance business have directly affected the insurance industry in the BVI. However, perhaps some of the jurisdictions that are entering into the captive market will be attracted more so to jurisdictions with which they have TIEAs. The BVI currently has more than 27 TIEAs in place with other jurisdictions, while others are considered and agreed to, from time to time.
Does the domicile itself currently have any wider regulatory concerns?
None specifically at present, although admittedly the BVI, like any other financial services jurisdiction, needs to review ongoing international standards initiatives to ensure compliance, with the result of increased cost of regulation and compliance.
With the introduction of a revised insurance legislative regime early in 2015, the BVI is very optimistic that its captive numbers will grow this year and continue into the foreseeable future.
