The Turks and Caicos Islands ("TCI") is a slice of heaven surrounded by beautiful turquoise waters and miles of sandy white beaches. It is made up of eight populated islands and over forty cays, and our moto is 'beautiful by nature'. But beyond the stunning vistas and sunny climes, TCI offers several concrete advantages to set up reinsurance vehicles and business.
What is reinsurance?
Reinsurance is the practice through which insurers transfer a portion of their risk portfolio to other insurers. In return for agreeing to take on some of the original insurer's liabilities, the reinsurer (being the party that agrees to share the insurance liability) generally receives a portion of the insurance premium from the ceding party (the original insurer).
Reinsurance is a mechanism through which ceding parties can effectively share some of their own insurance liabilities with another insurance company, while still ensuring it can meet all its legal commitments with regards to pay outs of its policyholders should they make an insurance claim.
Reinsurance allows ceding parties to retain liquidity in the event they must make a significant pay out to one or multiple claimants. It is particularly useful for insurers who provide significant
insurance coverage to individual policy holders, or insurers who would be on the line to cover large pay outs for multiple (usually several hundred or thousands) of claimants in the event of something like a natural disaster.
Why TCI for reinsurance?
The TCI insurance market includes insurers and reinsurers of domestic and non-domestic risk. The TCI is a global leader in the producer-owned reinsurance company ("PORC") insurance industry. However, TCI is also home to some captive insurance businesses as well.
The TCI tax-neutral regime is a globally responsible tax model that is simple and transparent. It efficiently supports the global flow of investment capital and financing without posing taxable impact to other countries' tax bases. Over 6,000 active reinsurance companies are registered in TCI to date, and approximately 70 captives are licensed in TCI.
Advantages of reinsurance in TCI
There are several advantages of setting up a reinsurance vehicle in TCI:
- TCI is a tax neutral jurisdiction;
- fees to incorporate a reinsurance company in the TCI are competitive vis-à-vis other jurisdictions in the Caribbean;
- the speed of the application process is efficient assuming all documentation and forms are complete and accurate;
- reinsurance companies are regulated by the Financial Services Commission which means that companies are compliant with anti-money laundering and terrorist financing and the Regulator applies a lighter touch to regulating PORCs in particular;
- tailored insurance or coverage is available in TCI that is not readily available in the commercial market or may be prohibitively priced;
- local currency is the United States dollar which is a universal currency which means that there are no exchange controls;
- reasonable initial capital and ongoing regulatory requirements which promote a favorable environment for reinsurance activities; and
- ease of access to the North American principal markets.
Can we help?
If you are interested in learning more about setting up a reinsurance vehicle in TCI, or if you would like to learn more about what we do, please get in touch. We'd be delighted to share more information about our services and how we can help.
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.