Clearly Better for Business, Cayman Island is Open for Reinsurance
The initiative to develop reinsurance business in the Cayman Islands recently took a big step forward November 1, 2012 when the Cayman Islands New Insurance Law came into effect along with its supporting Regulations on December 20th 2012 thus paving the way for separate categories for Insurance Linked Securities as class C licensees and Commercial Reinsurers as class D licensees.
These two classes of now have separate sections under the Law, no longer being “lumped” in as a class B, non-admitted insurer which is ideally suited towards captive insurers. Cayman clearly recognized the importance of maintaining and developing these two sectors within the reinsurance market.
A class C insurer is defined as “one carrying of insurance business including the provision of reinsurance arrangements in respects of which the insurance obligations of the class C insurer are limited in recourse to and collateralized by the class C insurer’s funding sources or proceeds of such funding sources which include the insurance of bonds or other instruments, contracts for differences and such other approved funding mechanisms approved by the Authority.”
A class D insurer is “one that enables the licensee to carry on of reinsurance business and such other business as approved by the Authority.”
A few of the highlights of each class are: Class C: Actuarial Valuation & Solvency Certification, requirement on the methodology of how the prescribed capital margin is met whereby the prescribed capital at least meets the minimum capital of $500 Audited statements in accordance with international recognized accounting standards and prescribed management letter A locally appointed manager will suffice for place of business in the Cayman Islands If incorporated under the Companies Law, 2 directors are required Class D: Minimum Capital of US$50 million with varying Prescribed Capital Requirements depending on life versus general business and the classes of assets plus consideration for retroceded premium and catastrophic exposed premiums. As an alternative to the Prescribed Capital Requirement a class D licensee may choose to use its own internal capital model subject to the approval of CIMA and be deemed to be the Prescribed Capital Requirement.
Audited financial statements are to be in accordance with international recognized accounting standards and prescribed management letter A place of business with heart and mind in the Cayman Islands including staff, facilities, books and records as the Authority may consider appropriate, having regard for the nature and scale of the business and a minimum of 2 directors are required under the Companies Law Actuarial valuation of assets and liabilities as well as loss and loss expense provisions and a solvency certification are required. Separate account segregation is required between general business and long-term business For both class C and class D insurers: Eight asset classes are clearly defined as well as catastrophic risk. Under the Law, the Cayman Islands Monetary Authority (“CIMA”), the regulatory body, is responsible for the issuance and maintenance of licenses, powers to inspect, fine and enforce its supervisory oversight to ensure a robust environment in accordance with the International Association of Insurance Supervisors guidelines.
Buoyant Start to 2017 for Cayman Insurance Industry
George Town, Grand Cayman: 13 April 2017
Following an excellent year for new insurer licenses issued in 2016 (39 in total), the Cayman Islands Insurance Industry has seen a buoyant start to 2017, with 8 new Insurer licenses issued in the first quarter. The...