The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Small/medium-sized businesses and investment managers are key niches being targeted by the Ministry of Financial Services in “relaunching the Bahamas” as a captive insurance domicile “within the next few weeks”.

Ryan Pinder, minister of financial services, noting that the likes of Bermuda and the Cayman Islands had developed specialist niches for their captive insurance industries, said the Bahamas needed to do likewise by “leveraging existing infrastructure” such as its shipping registry.

The Bahamas’ proximity to the US east coast, and the desire of many companies to reduce a variety of insurance costs, made this nation an attractive jurisdiction for captives serving small and medium-sized businesses, the Minister said.

And there were possible synergies with his strategy to attract small investment management/advisory firms to the Bahamas, as professional indemnity insurance costs were often “disproportionate” to their size.

An opportunity to provide the necessary coverage through Bahamas-domiciled captives, a move which would require legislative changes, was something this nation could also exploit in trying to build its external insurance business.

Indicating that the initiative was starting to gain some momentum, Mr Pinder said his Ministry had reached out to the private sector to understand its concerns, while it was itself contacted by the Insurance Commission on the issue.

The outcome will likely be a briefing session involving the Ministry, regulator and industry, with Mr Pinder confirming to Tribune Business that he was aiming “to relaunch the Bahamas, you might say, as a captive insurance jurisdiction.

“Internally in the Ministry, over the course of the past month, we’ve been formulating our strategy for captive and external insurance,” Mr Pinder added.

“It’s high on our radar screen. We’re working on the strategy now, and are looking to launch that in the coming weeks. We think there’s a tremendous opportunity here.”

Noting that Bermuda catered chiefly to large captives and Fortune 100-type companies, while the Cayman Islands were focused on medical malpractice liability, the Minister said there was no reason why the Bahamas could not carve out its own niche.

“We believe the Bahamas has an opportunity to have a niche presence as well,” Mr Pinder said. “Small and medium-sized captives for small and medium-sized businesses is definitely a niche we can participate in.

“That’s especially given our location next to the US eastern seaboard. There are plenty of small and medium-sized businesses looking to defray costs with regard to insurance.”

Captive insurance is essentially a means of self-insurance, with the underwriting entity actually established for - and owned - by the same person paying the premium. It is especially useful for professions such as doctors, where obtaining insurance via traditional means has become prohibitively expensive.

Suggesting that the Bahamas should also explore captive insurance for the many vessels flying its flag, Mr Pinder said: “We should also leverage some of the infrastructure we have in place, look at the types of risk that are high premium to the ship registry and produce a strategy for captive insurance.”

And “economies of scale” when it came to professional indemnity insurance premiums meant there was an opportunity for investment managers and advisers to use Bahamas-domiciled captives.

Acknowledging that this might require changes to existing legislation, Mr Pinder said he would work with the Insurance Commission on this, and pledged: “We’d like to pursue that.”