Cayman's $84.3 Million Stimulus

The most effective stimulus packages are those created by productive industry-through the motivation of industry participants to foster growth overall.

The Cayman Island's captive insurance industry is one such example of an ambitious, professional and philanthropic industry that has contributed an $84.3 million stimulus to the Cayman gross domestic product (GDP) in the past year alone.

From its beginnings in 1974, Cayman's captive insurance industry has continued to provide economic benefits to the jurisdiction. With solid, steady growth, even though the most tumultuous market conditions seen in our lifetimes, Cayman’s captive industry continues to thrive and is steadily and confidently chasing down Bermuda to take the lead as the world’s largest captive domicile.

The Cayman captives industry transparently manages privately held insurance assets, which allow companies to self-insure at rates significantly lower than those available on the retail market. Cayman is already the world’s largest catastrophe bond and healthcare captive domicile. A large proportion of Cayman domiciled captives are held by large hospitals and other health care providers helping to reduce the costs of health care to patients.

In addition to employing more than 400 Cayman residences (who therefore contribute to the economy through housing payments, utilities, food and entertainment), the Government and regulator fees and indirect revenue related to tourism, combine to make this significant contribution to the Cayman economy. To avoid double counting of the management fees, our estimates do not include salaries or the household expenditures of employees in or related to the industry.

Government coffers receive payments through the Registrar of Companies fees (estimated at $1.3 million annually) and the Cayman Islands Monetary Authority fees (estimated at more than $8.5 million in 2012). Our estimated GDP contribution calculation does not include the multiplier effect of the salaries earned by people employed at these stations.

The captive manager does not operate in a vacuum – other service providers are required for the operation of a captive, including lawyers, auditors and bankers. The estimated annual expenditure is $62 million, which then employs professional and support staff in those offices and again translates to further GDP contributions, again, not counted in here.

Because Cayman is such a desirable tourism destination, holding regular board meetings here and encouraging attendance at what is now the largest captive conference in the world – The Cayman Captive Forum – is an easy sell. Almost $13 million in revenue for the tourism sector is attribute to the captives industry, taking into account average spends by captive clients (and their families, who often travel with them) for accommodation, food and beverage, transportation and leisure activities.

The captive industry is notoriously philanthropic. In addition to regular charitable contributions made by the captive management companies themselves, the pride and joy of IMAC is our scholarship fund, which has raised more than US$1.8 million in efforts to educate one young Caymanian per year, regardless of their areas of study, who would not otherwise have the opportunity to go to university.

This is the beauty of private enterprise at work. A well-regulated industry that contributes healthily to the jurisdiction in which it operates, acts as the tide that raises all boats.

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Cayman Captive Forum

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