This year is proving to be another busy one for the Cayman Islands Monetary Authority (CIMA), with 28 new class B captive formations, one class D reinsurer formation, four class C special purpose vehicle formations and two portfolio insurance company (PIC) formations.
Has 2016 been a busy year for CIMA?
This year is proving to be another busy one for the Cayman Islands Monetary Authority (CIMA), with 28 new class B captive formations, one class D reinsurer formation, four class C special purpose vehicle formations and two portfolio insurance company (PIC) formations. The first nine months of the year have shown favourable growth so far. New captive formations have already exceeded the total new captive formations within Cayman for 2015. The positive development in new formations is symbolic to the sustained growth and increasing interest in the alternative risk financing that a captive provides, despite the stagnations in the market.
What has CIMA done over the last few years to make Cayman more attractive from a fiscal perspective?
By focusing on enhancing the robust regulatory framework in the Cayman Islands, CIMA has sought to develop a regulatory environment that is compliant with international standards and at the same time conducive to business operations. The formulation of the insurance PIC regulations in 2015 provide flexibility to the use of the traditional segregated portfolio company, the reduction of capital requirement for the class C insurers (special purpose vehicles), and the introduction of the statement of guidance for licensees seeking approval to use an internal capital model to calculate the company’s prescribed capital requirement are examples of the latter.
Is Cayman competitively priced when it comes to setting up a captive? Are there any plans to increase prices?
Any intention to increase prices is a responsibility of, and is determined by, the Cayman government. Nevertheless, Cayman is a comprehensive financial service jurisdiction with a multitude of internationally recognised service providers coupled with comprehensive and systematic regulation.
The sophistication and expertise garnered from having a captive in the jurisdiction, with partners, both private and public, who aim to maximise the efficiency of the captive structure and understand its risks, are primarily the most compelling reasons why the initial set-up cost is outweighed.
Having not had a full time head of insurance supervision until July this year, how has the appointment of Ruwan Jayasekera permanently benefited the domicile?
Even though CIMA didn’t have a permanent head of the insurance supervision division for an extended period, staff in the division always received leadership and direction from an acting head of insurance, who was appointed in the role on an interim basis in 2014 by CIMA’s executive management. In addition, the insurance supervision division always had a very strong senior management team with substantial collective regulatory, reinsurance and insurance industry experience supported by a group of analysts with relevant professional qualifications and experience.
Now that Jayasekera has been confirmed to the post of the head of insurance supervision division, this offers great benefits to the insurance industry in Cayman. This confirmation will further enhance the communication and collaborative relations between CIMA and its licensees, which has always been mutually beneficial.
Jayasekera is well known in the industry, and he has worked closely with industry practitioners including the two main industry bodies, Insurance Managers Association of Cayman (IMAC) and Cayman Islands Insurance Association, for many years. He had been involved in the drafting of the Insurance Law 2010 including several regulations, rules and Statement of Guidance documents, which were published by the authority. Therefore, Jayasekera understands the intent and the spirit of the law, including its proportionate and balanced application.
Having a permanent head of the division with years of Cayman regulatory experience makes it easier for the authority to follow its regulatory philosophy, which is to remain responsive, pragmatic and accessible to its licensees.
It also encourages us to use a risk-based and proportionate approach to ensure that our licensees are appropriately supervised.
Do you work closely with the Cayman captive association to promote the domicile?
The authority has worked closely with IMAC since its inception, and CIMA continues to maintain a receptive relationship with respect to the conduit of support they provide to the captive industry in Cayman. The aim through this combined effort is to develop a robust but proportionate regulation, enhancing the sustainability of the captive market.
Do you have any plans at CIMA for 2017?
The focus for 2017 is geared towards preparing for the upcoming international assessments to be conducted by the Caribbean Financial Action Task Force and the International Monetary Fund. Through these assessments the authority’s compliance with international standards will be evaluated, and the outcome will be imperative to the sustainability of Cayman as an offshore financial centre.
Therefore, the preparatory work previously, and currently, undertaken has been with an emphasis to maintain compliance with such standards.
