Definition of Insurance Business
Section 2 of the Insurance Act defines "insurance business" as:
"the business of accepting risks by effecting or carrying out contracts of insurance, whether directly or indirectly, and includes running-off business including the settlement of claims."
Regulation of Insurance Business
The Insurance Act gives the Cayman Islands Monetary Authority the responsibility of regulating the insurance industry in the Cayman Islands. This includes licensing, ongoing supervision, and enforcement. The day-to-day regulatory oversight of the sector falls to CIMA's Insurance Supervision Division.
Under the Insurance Act CIMA may issue the following categories of insurance licences:
- Class A Insurer's licence - permits a local or an external insurer to carry on domestic insurance business or limited reinsurance business as approved by the Authority.
- Class B Insurer's licence - permits an exempted insurer to carry on insurance business other than domestic business in respect of which - (i) at least ninety-five per cent of the net premiums written will originate from the insurer’s related business; (ii) over fifty per cent of the net premiums written will originate from the insurer’s related business; or (iii) fifty per cent or less of the net premiums written will originate from the insurer’s related business.
- Class C Insurer's licence - permits an exempted insurer to carry on insurance business involving the provision of reinsurance arrangements in respect of which the insurance obligations of the class C insurer are limited in recourse to and collateralised by the class C insurer’s funding sources or the proceeds of such funding sources which include the issuance of bonds or other instruments, contracts for differences and such other funding mechanisms approved by the Authority.
- Class D Insurer's licence - permits an insurer to carry on reinsurance business and such other business as may be approved in respect of any individual licence by the Authority.
- Insurance Agent's licence - permits a person (who is not an insurer) to solicit domestic business on behalf of not more than one general insurer and one long term insurer.
- Insurance Broker's licence - permits a person to arrange or procure, directly or through representatives, insurance or reinsurance contracts or the continuance of such contracts on behalf of existing or prospective policyholders.
- Insurance Manager's licence - permits a company to provide insurance expertise to or for class B insurers or class C insurers.
Standards of Regulation
CIMA regulates the insurance sector in accordance with:
Status of the Cayman Islands Insurance Industry
Since 1979 when the Insurance Act was first passed in the Cayman Islands, this jurisdiction has become a major centre for international insurance business. The Cayman Islands is the second largest domicile for captives and holds the number one position worldwide for healthcare captives.
Healthcare is the primary class of business among Cayman-domiciled captives, while workers’ compensation is the second largest class. The Cayman Islands captive insurance industry is composed mainly of companies emanating from North America. The next most important geographical source is the Caribbean and Latin America, collectively.
For current statistics and other data on the Cayman Islands insurance industry can be found in the Insurance Statistics section of this site.