The Tribune

Nichol & Co, an actuarial and risk consulting firm, yesterday announced the opening of a Bahamian subsidiary focused on providing captive insurance services.

Nassau Captive Management Services is designed to expand the services offered to international and local clients by providing captive insurance solutions to meet their risk management needs. A captive insurer is an insurance company established to insure the risks of its owners, thereby meeting their specific risk requirements.

Rayon Brown, a consulting actuary with Nichol & Co, and a director of Nassau Captives, said the new subsidiary will enable the company to offer a full solution for clients with complicated risk financing requirements.

He explained that the firm receives frequent requests from clients in the investment and capital markets industry for solutions to a variety of risk exposures, including political and environmental risks.

Mr Brown said more captive insurance providers are needed in the Bahamian financial services market because one factor holding the industry back is the absence of the “Silicon Valley” effect.

He describe Bermuda as a risk management “Silicon Valley” because it has so many risks specialists that clients believe they will find a full solution to their problems just by landing on the island. “There is always some guy just down the road who can help with a problem that your manager is not an expert in,” Mr Brown said.

He added that the recent introduction of the Commercial Enterprises Act was a step in the right direction if it helps attract talent to The Bahamas in the short-term. However, Mr Brown said local private sector participation was key to ensuring long-term growth in the sector.

“Clients need to know that there is a component of talent that remains here for the long haul,” he said.

There are a number of factors why companies may find a captive solution attractive, including high or volatile premium rates in traditional markets; an inability to obtain cover in the traditional market for a variety of reasons; the need to design policy terms that better meet its requirements; the ability to retain more profits or improved cash flow due to having a better grasp on its true risk financing costs; possible tax advantages – provided the core risk management needs are met.