Source: Katarina Krempova¸ PKF Malta¸ 21 December 2011
At this month’s Cayman Captive Forum¸ Cayman’s Premier McKeeva Bush announced his aggressive plan to lure reinsurers away from Bermuda with an aim to boost slowing reinsurance growth in the Cayman Islands.
To encourage specialised reinsurers to domicile in the islands instead of Bermuda¸ the Cayman’s government would introduce a number of immigration incentives which would include 10-year work permits for senior executives¸ flat or reduced work permit fees¸ as well as a waiver for normal work permit application requirements. In the new marketing strategy¸ Premier Bush is targeting not only reinsurance CEOs and senior executives but also law firms both in New York and in other financial centres.
“Anecdotal evidence from the industry suggests that as a jurisdiction the Cayman Islands has several advantages that we can capitalise on to attract greater interest from reinsurance companies¸“ Bush said. According to him¸ reinsurance entities can benefit from no income¸ payroll¸ property or corporate taxes¸ as well as expatriate workers from the opportunity to own their property. In addition¸ the Island’s “labour costs in the reinsurance industry are lower than in Bermuda”¸ according to The Cayman Free Press.
However¸ in comparison to Bermuda¸ Cayman is not seeking equivalence with stringent capital adequacy requirements under Solvency II¸ entering into force in 2013 in the European Union. The Cayman Free Press remarked that these requirements could increase reinsurance demand and attract certain reinsurers that are seeking to domicile with a lower capital threshold.
Bermuda’s premier and minister of Finance Paula Cox doesn’t believe that Bush’s plan to attract Bermuda reinsurance business and to strengthen the relationship with the European Union¸ UK and US jurisdictions will succeed in the short-term. “First of all¸ this is not something that is going to happen overnight. There’s a great deal of infrastructure that will need to be put in place in order to attract these companies. Secondly¸ in addition to attracting the financial capital¸ the requisite human capital will need to be assembled to enable a viable reinsurance centre to be formed¸” she explained. According to her¸ it needs time to identify changes associated with Cayman’s immigration legislation.
Moreover¸ Cox is sure about Bermuda’s relationship with reinsurance partners and would like to stay focused on its strategies of collaboration with business partners to enhance enviable reputation by strengthening relationships with the European Union¸ UK and US jurisdictions; strengthening regulations to satisfy the global regulatory agencies; and enacting business friendly legislation.
According to Premier Cox¸ the Bermuda marketplace is known globally as a centre of excellence in the area of reinsurance underwriting. In her speech¸ she has pointed out the following key points which make Bermuda one of the top three reinsurance centres of the world:
- Advances in the technical pricing of risk
- The creation of alternati