The Tribune

The Bahamas Financial Services Board (BFSB) and industry stakeholders yestertday hosted an introductory session on captive insurance, responding to interest expressed by the industry.

BFSB chief executive, Aliya Allen, spoke of the collaboration with the Insurance Commission of the Bahamas (ICB), the Ministry of Financial Services, and the Insurance Institute of the Bahamas (IIB) in repositioning this nation as a captive insurance domicile.

Apart from the Bahamas’ participation in international conferencs, Ms Allen said 2013 had seen the launch of the Captive Designation programme with the International Centre for Captive Insurance Education (ICCIE), plus the recent captives presentation at the Bahamas Shipowners Association’s London annual general meeting (AGM).

Marcy Waterfall, senior vice-president in the Vermont office of Marsh’s Captive Solutions Group, gave an overview of risk management concepts for both individuals and corporations, leading into why captives are considered as risk selection and mitigation vehicles.

She provided a comprehensive outline of captives - their types, structures, uses and domiciles around the world.

Ms Waterfall also spoke to US tax considerations, including the 831(b) US Tax Election for insurance companies earning less than $1.2 million annually.

The second component of Ms Waterfall’s presentation dealt with a case study, following a captive from inception through its first year financial results, expansion of its business plan, its five-year claims history right up to the present day.

Jamell R. Bodie, the Insurance Commission’s manager of supervisory and regulatory practices, gave an introductory overview of its role.

Her presentation was on captive licensing requirements, plus the ongoing requirements for such licensees, the role of the resident representative and the licensing, and role of the insurance manager.

Ms Bodie gave examples of applications reviewed, showing some of the challenges that can be encountered with new applications, and detailing what a complete application should look like.

In addition to her policy planning and development role with the ICB, Ms Bodie is responsible for new applications for both domestic insurers and external insurers and intermediaries.

Ms Allen, meanwhile, said captives allow companies to obtain insurance coverage that is tailored to their own unique risks.

In the US alone, it is estimated that over 40 per cent of major corporations have one or more captives. Ms Allen said: “We need to ensure our place in the captive space. Location is only one asset that weighs heavily in the Bahamas’ favour as a hub for this type of business.

“Supporting development of the industry is the country’s highly experienced and diversified asset and wealth management industry. The fact that the foundation of the country’s financial services industry is in the latter, and that the Bahamas has recognised leadership in these areas, has enabled the jurisdiction to pinpoint the synergies this sector has with the insurance market.”