Acknowledging the existence of a highly competitive captive
insurance domicile market worldwide, the question is appropriately
asked, "Why form a captive insurance company in
Apart from Barbados' reputation as one of the premier
holiday destinations in the world and its recognition as being
among the top developing nations worldwide, the island has
developed and enjoys a reputation as one of the world's leading
international business centres. This development is not by chance -
successive governments have created a legislative framework and
business infrastructure geared towards encouraging foreign
investment, which has contributed to the island having this
Certain key aspects of the business infrastructure can be
highlighted in explaining why Barbados works for captive insurance
Barbados has an excellent international reputation and was
included in the Organisation for Economic Co-operation and
Development's "white list" from the beginning.
Furthermore, Barbados has an extensive tax treaty network,
providing great opportunities for investors to optimise their tax
Underlying legislation for international companies
In choosing Barbados, there is a relatively simple underlying
structure available, with entities being able to choose between
registering as Exempt Insurance Companies (EICs) or Qualifying
Insurance Companies (QICs).
Normal domestic companies operating on the island are subject to
corporation tax and have some exposure to withholding taxes. The
EICs who register under the Exempt Insurance Act are exempted from
such taxes, whereas the QICs, who register under the Insurance Act,
are subject to the full domestic tax regime, but benefit from a tax
credit for business originating outside the island. This tax credit
results in corporation tax liability of approximately 1.75% for
general insurance business and 0.35% on investment income for life
Infrastructure, professional services and workforce
The island boasts a well-developed infrastructure, including a
robust banking system, modern telecommunications network, an
international airport and access to world-class accommodation.
There is a relatively large and highly literate population,
resulting in the ability to provide an excellent range of
professional services using highly trained professionals. The
majority of the workforce is local, thus obviating the need for a
significant "rotating" expatriate employee base. There is
a well-established legal profession, with a number of firms
specialising in corporate and international business-related
The major international accounting firms are represented in
Barbados, existing alongside a number of local firms all offering
assurance, tax, advisory and corporate services.
There are also several captive insurance management companies,
comprised of those aligned with international insurance brokerage
operations, along with several independent management
Incorporation and regulatory environment
There is a relatively simple licencing and incorporation
process, which generally takes between four to six weeks, dependent
upon the timing and completeness of the required due diligence
information and payment of initial capital. Barbados provides a
robust and efficient regulatory environment, with all non-bank
financial institutions regulated by the Financial Services
Initial set-up and ongoing operational costs are very
competitive. A relatively low minimum capital of US$125,000 is
required and a simple ongoing solvency structure.
Geography, climate and accessibility
The island is the most easterly of the Caribbean island chain.
Barbados has a tropical climate with cooler temperatures during
December through March, whereas the period July through November is
generally more humid and wet. Barbados is easily accessible,
with frequently scheduled flights to and from most international
Why form a captive in Barbados?
In summary, Barbados has established itself as one of the
leading international business domiciles, with its international
insurance industry at the forefront of this development. It remains
one of the largest global captive insurance domiciles. With its
well-regulated business environment, excellent infrastructure,
modern legislation and expanding treaty network, Barbados continues
to attract significant international insurance business.
Simply stated, it makes eminent business sense to form your captive
insurance company in Barbados.
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.
Now that the United Kingdom has served notice to leave the European Union under Article 50 of the Lisbon Treaty, managers of offshore funds have a clearer timetable for when Brexit will happen, with the UK scheduled to leave the EU in March 2019.
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).