Cayman a step closer to US qualified status
The Cayman Islands wants to rival Bermuda as a reinsurance centre, and is following parts of the blueprint that made it happen here.
Their regulators believe they are closing in on a key development that would substantially improve the global standing of their regulatory office.
Kara Ebanks, the head of the Cayman Islands Monetary Authority’s insurance supervision division, recently told the country’s growing reinsurance conference, [Re]connect, that they were getting closer to achieving qualified jurisdiction for the country’s reinsurance industry.
The Cayman Compass reported her optimism: “I would say the progress has been positive.”
Bermuda was granted qualified jurisdiction status by the US National Association of Insurance Commissioners in 2015.
It allows Bermuda’s reinsurers, which do business on a cross-border basis with US insurance clients, to conduct business under a streamlined set of regulatory requirements, without additional capital or regulatory collateral requirements.
In 2019, the NAIC approved Bermuda as a Reciprocal Jurisdiction as of January 1, 2020, after the NAIC completed a five-year re-evaluation, and approved Bermuda as a Qualified Jurisdiction.
Ms Ebanks said Reciprocal Jurisdiction status was a top priority and the fact that four NAIC Commissioners were attending Cayman’s [Re]connect conference for the first time, gave her confidence they were open to seeing how the Cayman regulators were progressing.
She added, “Because reinsurance is cross-border, there will always be that need for partnership. This showing of the US insurance commissioners is part of that.”
NAIC members, insurance commissioners from Oklahoma, Wisconsin, Tennessee and Utah, were on a regulatory panel at the conference last week.
Cayman Compass reported that Glen Mulready, the Oklahoma state commissioner, said of Cayman representatives: “They have continued to reach out and work with us and I know they are trying to become a qualified jurisdiction. We will do our due diligence and work with them.”
He said there were common goals to make sure companies retain solvency and consumers are protected.
Ms Ebanks said increasing complexity in transactions demanded a “risk-based approach” to regulation and cross-border co-operation.
A recent report released by the Insurance Managers Association of Cayman, and Cayman Finance, outlined what effect some international business had on the country’s economy.
“A Study to Assess the Economic Impact of the Insurance and Reinsurance Sectors on the Cayman Islands Economy” was released last month.
The report concluded the international insurance sector contributes significantly to the Cayman Islands economy, with an annual impact of over $233 million in direct and indirect impacts and employment of 256 persons. It was noted the strong synergies with the tourism sector, with firms who took part in the survey supporting over 40,000 stayover days of tourism.
The report also suggested that estimated economic impact is likely underestimated due to three main data limitations:
• The estimated annual average salary per person was not adjusted for inflation
• The sample size
• The survey did not capture most of the reinsurance firms who operate in the Cayman Islands
The full economic impact indicated a combined direct and indirect economic impact of over $233 million per year.
As can be expected, fees paid to Cayman based service providers was the largest share, with a direct impact of $88.1 million and an induced impact of $48.44 million, combining for $136.54 million.
Employment had a direct impact of $24.7 million and an induced impact of $13.59 million, combining for $38.29 million.
The hospitality portion or expenditure on client meetings had a direct impact of $16.35 million and an induced impact of $8.99 million, combining for $25.34 million.
Fees paid to the Government had a direct impact of $11.8 million and an induced impact of $6.49 million, combining for $18.29 million.
• For more on A Study to Assess the Economic Impact of the Insurance and Reinsurance Sectors on the Cayman Islands Economy, see Related Media
You must be Registered or to post comment or to vote.
