Members of the Legislative Assembly have voted in favor of a private members’ motion to consider giving incentives to reinsurance and hedge fund management businesses and their senior executives.
The motion brought by George Town MLA Winston Connolly called on the Cayman Islands government to consider a critical review of the business environment in the insurance and hedge fund management sector, the offering of relevant and appropriate incentives, and sufficient investment in the staffing and offerings of the regulator, the Cayman Islands Monetary Authority.
Since the establishment of reinsurer Greenlight Re, there has been an increased number of hedge fund and fund managers who have sought to put capital to work in the reinsurance sector, Mr. Connolly said.
By reducing red tape and other impediments to doing business, more reinsurance firms could be enticed to relocate to Cayman, he said.
“One of the major concerns from the industry is security of tenure, and although we have in the past given key management roles extended work permits, I think that we can do better in terms of giving some of them permanent residence at an earlier date,” Mr. Connolly said.
He cited the example of Singapore as one of the competing jurisdictions that offers a faster route to permanent residence with the right to work. Mr. Connolly noted the industry has made representations that if earlier permanent residence for senior executives could be guaranteed, more business would come to the Cayman Islands.
However, such incentives should be tied to guarantees that businesses would employ and train Caymanians and provide opportunities for promotion. Mr. Connolly believes it would be within the means of the current immigration system to verify that businesses complied with such requirements.
The immigration process and the approval of work permits should be accelerated, he said, with the aim of a “red carpet treatment” and the granting of work permits for reinsurance and hedge fund businesses within five business days.
The motion also calls for the appropriate staffing of the Cayman Islands Monetary Authority and Cayman’s continuing compliance with international anti-money laundering and tax information exchange standards.
To position the financial services industry for the future, government should carry out a critical assessment of the business environment, in particular in the reinsurance and hedge fund management space.
Wayne Panton, minister for financial services, said much of what the motion calls for is already being done by government.
Government’s collaboration with Cayman Finance encompasses a number of working groups, including one for insurance and reinsurance to assess market demands and whether Cayman is still competitive with its fees and regulations, he said.
Mr. Panton agreed that high-level executives expect to be welcomed if they come into a country and establish businesses that hire staff locally. However, the immigration system already has a provision for a 25-year work permit limited to certain areas, including fund administration, brokerage, investment fund services, investment banking and financial trading, as well as captive insurance and reinsurance management.
“There is a limited understanding that this facility exists under the immigration law,” he said.
With regard to the staffing of the Cayman Islands Monetary Authority, the minister said one persistent issue has been the difficulty in filling the position of head of insurance supervision at the authority. However, he noted that interviews have been conducted recently and an offer would be made shortly.
In addition, CIMA is working on capital reserve requirements and fees to ensure that they are appropriate for each type of insurance business and in line with market rates.