Licensing and Application Process

The initial phase of a successful captive should be the completion of a feasibility analysis, which reviews the current insurance program and determines those programs where it is most advantageous to use a captive.  This phase will also have looked at a number of variables needed for the business plan, such as risk retention levels, limits of coverage, types of coverage, structure of program (i.e fronted versus direct) and domicile selection.

Once the a "go decision" has been made for the captive, the following steps will be needed:

1. Final selection of Cayman Islands Insurance Manager
2. Negotiate fronting and reinsurance arrangements (as necessary)
3. Prepare the Licence Application with assistance from the Insurance Manager.
4. Meet with the Insurance Division of the Cayman Islands Monetary Authority (“Insurance Division”) to discuss the proposed Captive.
5. Submit the completed Application to the Insurance Division
6. The Captive can be licenced in 4 – 6 weeks

The Application should include:

1. Completed Licence Application form
2. Business Plan which should include:
   • rationale for formation;
   • ownership and management structure, including proposed capitalization;
   • 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
3. Financial projections for a three-year period
4. Acceptance letters from an Insurance Manager and Auditor in the Cayman Islands
5. Letter of undertaking as to minimum capital (usually from shareholder)
6. Personal questionnaire, references, and police clearance certificates or equivalent for managers, shareholders, directors and officers.

Actual incorporation of the company is organized through the General Registry.  Incorporation normally takes 5 business days from the submission of documents and is usually only done after the Insurance Licence has been approved in principle.

For more information on Captives in the Cayman Islands visit the Cayman Islands Monetary Authority's website at www.cimoney.com.ky and view the Insurance Guidelines under the Policy & Research tab.