A new Statement of Guidance
("Guidance") was recently issued by the
Cayman Islands Monetary Authority
("CIMA") which sets out their minimum
standards in relation to professional indemnity
("PI") insurance coverage (i.e. for
legal costs and claims by third parties for damages arising from
acts, omissions or breaches of professional duty) to be maintained
by Cayman Islands licensees when conducting regulated
The Guidance applies to the following licensees
("Licensees"): Trust Companies;
Insurance Brokers, Insurance Managers and Insurance Agents; Mutual
Fund Administrators;2 Securities Investment Businesses;
Corporate Service Providers and Company Managers; and Corporate and
Accordingly, the Guidance does not apply to regulated mutual
funds under the Mutual Funds Law, Excluded Persons under the
Securities Investment Business Law, registered private trust
companies under the Banks and Trust Companies Law, or registered
directors under the Directors Registration and Licensing Law.
The Guidance describes the minimum policy features of the Amount
of Cover (Limit), Excess/Deductibles, Scope of Indemnification,
Exclusions, Persons Covered, Automatic Reinstatement, Legal Costs,
Fraud/Dishonesty/Infidelity, Retroactive Cover and Run-off
In particular, the Guidance provides that Licensees should
maintain adequate PI insurance which, where practicable, should be
held with an insurer licensed to carry on domestic business in the
Cayman Islands. The Guidance allows a Licensee to use group
insurance cover (e.g. outside of the Cayman Islands) where the
equivalent requirements are met. CIMA also recommends that an A.M.
Best rating of B+, or its equivalent, should be the minimum rating
criteria when choosing an independently rated PI insurance
In determining adequate cover, Licensees should undertake a risk
assessment of possible loss exposure. The Guidance sets out a
number of factors for consideration in the assessment. The PI
insurance cover should be assessed at least every two years.
Although some Licensees may require higher coverage, the
Guidance indicates that there should be a minimum limit of at least
US$1 million for any one claim and US$1.5 million in aggregate.
However, where a Licensee may be required by statute (e.g. a
Regulatory Law) to maintain a higher amount of cover, the statutory
amount shall prevail.
Upon written application, CIMA can consider and approve
alternative arrangements that are equivalent in effect to, and give
no less protection than, adequate PI insurance coverage (e.g.
For further information, please liaise with your usual Maples
and Calder contact or any of the above contacts.
1 The insurance cover should include activities of
current and former officers and employees, as well as service
providers, agents and consultants working for the Licensee (unless
the latter category has sufficient insurance cover of their
2 CIMA acknowledges that there is no statutory
requirement currently under the Mutual Funds Law for Mutual Fund
Administrators to maintain insurance. However, CIMA expects Mutual
Fund Administration Licensees to apply the Guidance as a matter of
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
This webcast focuses on the impact FATCA and CRS are having on structured finance vehicles set up in the BVI, Cayman Islands and Ireland and covers in detail the impending reporting and notification deadlines in each of these jurisdictions.
On the 9 September 2016 the MFSA issued feedback to its consultation of the 1 April 2016 in relation to intra-group loans.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).