The Cayman Islands Monetary Authority issued 26 new insurance licenses and four insurance intermediary licenses last year. The number of Class A insurance companies, which are licensed to offer insurance products in the domestic market, increased from 28 to 31 during 2015.
However, a larger number of insurance licenses were surrendered during the past 12 months, which reduced the number of Class B, C and D insurance companies, consisting of captives and reinsurance companies, to 708, down from 760 at the end of 2014.
Earlier last year, Kieran O’Mahony, president of the Insurance Managers Association of Cayman, pointed to the U.S. healthcare reform and the consolidation of healthcare systems in the North American market as the main reasons for the decline.
Given that the Cayman Islands is the leading jurisdiction for healthcare captives, this has resulted in a consolidation of healthcare captives in Cayman. Almost half of all Cayman captives focus on healthcare-related risks, and more than 90 percent insure risks in North America.
However, the remaining captives tend to be larger and better capitalized and provide the opportunity to write new lines of business, he noted.
At the end of 2015, medical malpractice liability continued to be the largest primary line of business with 239 companies, or 34 percent of all captives, followed by workers’ compensation with 149 companies, representing 21 percent of all captives.
As of Dec. 31, 2015, the Cayman Islands’ international insurance market reported total premiums of US$12.7 billion, and total assets were reported at US$59 billion.
Another contributing factor to the pressure on captive insurance numbers in Cayman is the growing competition in the sector globally.
Vermont in the U.S., the third-largest captive domicile trailing Bermuda and Cayman, reported it had licensed 33 new captive insurers in 2015 compared to 16 in 2014.
Eleven captives, including six risk retention groups, moved to Vermont in 2015, with captive re-domestications coming from Arizona, Bermuda, Cayman Islands, Kentucky, Nevada and South Carolina.