In March 2026, the Cayman Islands Monetary Authority (“CIMA”) published its revised Enforcement Manual (Regulatory Handbook Volume 2) (the “Manual”), setting out the policies and procedures CIMA will follow when taking enforcement action against authorised persons.
While the Manual applies across all regulated sectors, reinsurance companies — whether licensed as Class B or Class D insurers — should pay close attention to its practical implications for board-level governance and oversight.
A Broad Enforcement Toolkit – Beyond Fines
The Manual confirms that CIMA has a wide range of enforcement powers at its disposal, from supervisory letters and administrative fines through to licence suspension or revocation, the appointment of controllers or advisors (at the reinsurer’s expense), and applications to the Grand Court for winding up. CIMA will determine the appropriate response in each case having regard to what is fair, reasonable, and proportionate.
Boards should note that enforcement actions are not limited to fines — operational interventions such as controllership can fundamentally displace board authority.
Solvency and Capital Are the Principal Exposure
For reinsurers, the most severe enforcement risks are concentrated around capital and solvency. Failure to maintain prescribed solvency margins, adequate risk management arrangements (including reinsurance and retrocession), or an effective system of governance are all classified as “Very Serious” breaches under the Monetary Authority (Administrative Fines) Regulations (2025 Revision) carrying discretionary fines of up to CI$1,000,000 for an entity. If capital falls below the prescribed requirement, the reinsurer must present a remedial action plan to CIMA — failure to do so is also a “Very Serious” breach.
Boards should ensure they have real-time visibility over solvency positions and that escalation protocols are in place.
Business Plan Discipline Is Non-Negotiable
Reinsurers must carry on business strictly in accordance with their approved business plan and obtain CIMA’s prior written approval for any material change. Deviation without approval is a “Very Serious” breach. This is particularly relevant for boards considering new reinsurance lines, changes to retrocession programs, or structural reorganisations. The Class D licensing policy further requires detailed ongoing disclosure around intercompany reinsurance arrangements, third-party contracts generating more than 10% of annual premium, and changes to underwriting guidelines.
Publication and Reputational Risk
CIMA must publish licence suspensions and revocations in the Gazette under the Insurance Act. The revised Manual completely overhauls Part III, replacing the June 2025 Manual’s brief publication note with a discretionary publication framework. Under the framework, when deciding whether to publish other enforcement actions or administrative fines CIMA will consider, among other factors, the person’s cooperation with CIMA, compliance record, severity of the breach, and whether publication could cause unfair or undue damage to the person’s business and stakeholders. Publication generally occurs after a final decision and requires approval by CIMA’s Management Committee or Board, as applicable.
In the reinsurance market, where counterparty confidence and credit ratings are fundamental to commercial relationships, the reputational consequences of published enforcement action can be more damaging than the sanction itself.
Boards of Cayman-domiciled reinsurers should treat this revised Manual as a prompt to review their compliance frameworks. Key priorities include ensuring ongoing solvency monitoring and early-warning mechanisms are robust, confirming that business plan change protocols incorporate CIMA notification requirements and establishing clear internal procedures for cooperating with CIMA investigations. The revised Manual does not create new obligations, but it makes CIMA’s enforcement approach more transparent. It is important for Boards and senior management to be aware of the matters requiring CIMA approval or notification, to ensure that applications are submitted where required and to engage early with their legal counsel and insurance managers so that advice can be provided on the applicable requirements.
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.
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