Form a Captive

With more than 700 active captive insurance companies domiciled in the Cayman Islands, forming a captive is a well-trod path, with scores of highly qualified and experienced service providers to help along the way.

Captive formation

The initial phase of any successful captive is the preparation of a complete feasibility analysis, which reviews the current insurance programme and determines those programs where it is most advantageous to use a captive.

The second phase is the business plan - risk retention levels, limits of coverage, types of coverage, structure of programme (i.e fronted versus direct) and domicile selection.

Once the decision has been made to establish a captive, the process is as follows:

  • Select a Cayman insurance manager
  • Negotiate fronting and reinsurance arrangements (as necessary)
  • Prepare the CIMA license application with assistance from the insurance manager.
  • Meet with the Insurance Division of the Cayman Islands Monetary Authority to discuss the proposed captive.
  • Submit the completed application¬†

The captive can be licensed in four to six weeks.

What is the application process?

The application should include:

  1. Completed license application form
  2. Business plan which should include:
    • rationale for formation;
    • ownership and management structure, including proposed capitalisation;
    • description of proposed insurance programs, including limits and retentions supported by recent actuarial analysis
    • details of any fronting and reinsurance arrangements
    • details of claims administration;
    • description of loss reserving methodology;
    • description of investment and dividend policy
  1. Financial projections for a three-year period
  2. Acceptance letters from an insurance manager and auditor in the Cayman Islands
  3. Letter of undertaking as to minimum capital (usually from shareholder)
  4. Personal questionnaire, references, and police clearance certificates or equivalent for managers, shareholders, directors and officers.

Actual incorporation of the company is organised through the General Registry.  Incorporation normally takes five business days from the submission of documents and is usually only done after the insurance license has been approved in principle.

See the Captive Insurance in the Cayman Islands Handbook (revised september 2016), sponsored by KPMG for more information.

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