The Bermuda captive insurance industry contributes an estimated $174 million every year to the island’s economy, according to a new research study conducted by PwC for the Bermuda Insurance Management Association (BIMA).
The study found that the sector directly employs at least 557 people in Bermuda and generates a minimum fee income of $139 million each year.
In addition, $35 million is contributed annually by captives to the Bermuda government, regulators, local suppliers and commercial property owners, as well as hotels and other business hospitality vendors.
The study revealed that Bermuda was home to 776 active licensed captive insurers in 2016, generating $55.3 billion in annual gross written premiums.
According to the research, 2016 showed stability compared to 2015, with registration levels consistent with the overall captive market. New registrants came mainly from the traditional US market, but also included setups from Latin America, a key emerging market.
BIMA president Grainne Richmond said: "The survey underscores the value of our captive market in terms of the number of jobs it creates, as well as the substantial financial contribution it makes to the local economy every year via fees and other spending. Our captive insurance managers and service providers may be less visible around Hamilton than Bermuda’s globally recognised commercial reinsurers, but they work diligently behind the scenes to retain and grow this valuable sector."
Service generated by captive companies totalled $139 million, in the form of management, legal and corporate secretarial, actuarial, audit, investment management and banking fees.
A further $35 million included $16.4 million in payroll tax and social insurance contribution; $315,000 in work-permit fee income; $5.3 million in annual business fees to the Bermuda Monetary Authority; $6.74 million in commercial rent; $3 million in hotel revenue; $1.8 million in restaurant and food spend; and an estimated $200,000 per year on local taxis.
David Gibbons, partner and captive insurance leader at PwC Bermuda and chair of the Bermuda Captive Conference, said: "The results highlight the significant impact the captive market has on Bermuda’s economy. The survey also shows the continued importance of the time the private sector and Bermuda Business Development Agency (BDA) have invested in protecting and growing the industry, both in traditional markets (US and Europe) as well as Latin America and Canada."
Jereme Ramsay, BDA’s business development manager for risk solutions, added: “These statistics will help attract further insurers, investors and entrepreneurs to our island, stimulating further economic growth.”