THE Cayman Islands has overtaken Bermuda?s once-commanding lead as the domicile of choice for off-shore captive insurance companies ? and now the small Caribbean nation is taking aim at the re/insurance market that has beaten a path to Bermuda?s door for more than 20 years.

The newspaper reported this week that Bermuda?s destabilising on-again, off-again Independence debate along with re/insurance industry fears about increasing expenses and congestion here meant more companies were by-passing Bermuda in favour of Cayman.

?Up until recently Bermuda was known as the jurisdiction with the largest number of captives while the Cayman Islands was regarded as hovering in that island?s shadow,? said the newspaper.

?But in recent years things have changed and for the last three years this jurisdiction has been running neck and neck with Bermuda for new captive formations.

?Although there are over 700 captive insurance companies registered in Cayman, to get a feel for just how big the captive industry is, it is important to note here are over $26.5 billion in assets held by companies registered in this country.

?This number exceeds the estimated property damage of $22.7 billion in Louisiana from Hurricane Katrina, which was the largest recorded natural disaster in the US.?

Cayman?s captive insurance business is red hot with a 37 per cent increase in assets in less than two years and it shows no signs of slowing down, the reported.

The general manager of Marsh Management Services Cayman Ltd. and the chairman of the Insurance Managers Association of Cayman, Seamus Tivnan, told the newspaper that for new licences in 2005, Bermuda didn?t even come in on the top ten list in a recent CNN Television news article.

?Another recent development that everyone in the industry is talking about is the opening of Greenlight RE, the first reinsurance company in this jurisdiction, which could lead the way for more reinsurance companies to come here instead of Bermuda,? reported the . ?Developing a re/insurance industry would be a natural offshoot of the strong captive market here.

?It is the first so it always takes a leader to do anything and others are likely to follow,? said Mr Tivnan. ?Especially with Bermuda?s constraints on space and human resources.?

He explained that real estate is so tight in Bermuda that there is not much room to expand and it is incredibly expensive. The cost of relocating there is much more expensive for commercial and residential that it is more cost-effective to relocate an executive to expensive cities such as New York, London or indeed the Cayman Islands.

Mr Tivnan said Greenlight RE was still new and the country as well as the captive insurance industry in particular were not fully aware of its capability yet, but he believed that some companies would use Greenlight.

?I don?t think I will wake up next week and there will be 50 reinsurance companies here. It takes time to put things together, but I hope there will be three or four companies here by the end of next year,? he told the

Mr. Tivnan said not every captive needed re/insurance. The need for re/insurance depended on the type of captive and risk within that captive. If captives were funded sufficiently to cover their risk then it did not need re/insurance.