While few would dare slight Bermuda’s beautiful beaches or
personable populace, some competing jurisdictions have called into
question whether Bermuda’s world-leading position as captive
domicile of choice will continue. The answer, of course, is an
Bermuda-based expertise, recent regulatory changes and Bermuda
(re)insurance market developments among other factors, all suggest
that Bermuda’s dominance as a captive domicile of choice will
continue into the foreseeable future.
Captives, for those who may not know, are insurance companies
established to cover the risks of a related company or companies.
For example, this newspaper’s owner, The Bermuda Press
(Holdings) Ltd may seek to cover risks relating to defamation, for
example, through its own insurance company rather than using
another local or overseas insurance company. It may choose to do so
if the costs of set up, regulatory environment and running costs
are favourable relative to the cost of insuring through existing
carriers – or it may do so for a variety of other reasons. In
reality, captive structures range in complexity from as simple as
the above example to those that are far more complicated.
This summer’s Bermuda Captive Conference was testament to
Bermuda’s leading position within the global captive market.
As noted in the recently published Bermuda Business Development
Agency press release following the conference, Bermuda is home to
nearly 800 captive insurance companies, supporting primarily
Fortune 500 corporations in the US, and generating more than $48bn
in annual gross written premiums.
Bermuda is also diverse in that it plays host to a growing
number of captives from Latin America and Asia and other regions
around the globe.
In the light of concerns raised in industry feedback, the Bermuda Monetary Authority (BMA) has decided to postpone the introduction of various adjustments to the Bermuda Solvency Capital Requirement (BSCR) standard formula that were proposed in its November 2016 Consultation Paper.
The MFSA has issued new guidelines on Product Oversight and Governance arrangements by insurance undertakings and insurance distributors as required by the Insurance Distribution Directive ("IDD") to be implemented by manufacturers of insurance products.
Despite the notable uncertainty concerning the United Kingdom and Gibraltar's future trading relationship with the European Union, there are a number of upcoming developments which the Gibraltar insurance industry and its stakeholders should be monitoring.
In less than ten months, the Insurance Distribution Directive (‘IDD') will be repealing the current Insurance Mediation Directive regulating the activities of insurance undertakings, insurance intermediaries and insurance ancillary intermediaries.
The Cayman Islands is home to over 700 captive insurance companies. The word ‘captive' refers to the relationship between the insurance company and its owner.
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