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Insurance Licensing Requirements
Forming a Class "A" Insurance Company

To establish a domestic insurer in the Cayman Islands the Cayman Islands Monetary Authority (CIMA) will require a formal application for a Class "A" Insurer's Licence. This application is prescribed in the Insurance Act and requires, inter alia, the following information:

  1. Name of applicant. This refers to the name that the Class “A” Insurer will bear, and should be pre-approved for use by CIMA and the Registrar of Companies.
  2. The Certificate of Incorporation for Local Insurers, issued by the Registrar of Companies. Please note that this does not have to accompany the initial application. If CIMA accepts the proposal and decides to proceed with the application, a letter can be issued to enable the applicant to proceed with the incorporation while the application is being processed. Please note that External/Exempt Insurers will be required to submit a Certificate of Good Standing from the home regulator.
  3. A detailed business plan
  4. Three years' financial projections
  5. Details of reinsurance agreements
  6. Personal details and references for proposed Directors and Shareholders. A completed personal questionnaire should be provided in respect of ALL proposed Directors, Officers and Managers. A “police clearance certificate” is also required, but CIMA will accept a sworn affidavit as an acceptable “other certificate.”
  7. Latest annual report, audited accounts and certificate of solvency if an approved external insurer's licence is requested.

The application fee for a Class "A", which becomes the first year's licence fee, is returnable if the licence is refused (see: Insurance Fees). This fee is payable annually before 15th January.

The Licensing Process
  1. The Insurance Supervision Division will review the application and raise questions, as necessary. Once CIMA is satisfied that the proposal is sound, a letter can be issued to the Registrar of Companies to allow incorporation of the company.
  2. The licensing procedure can take up to Six (6) to Eight (8) weeks. The CIMA Board will grant approval subject to confirmation that:
  • For Local Insurers - CIMA has received the final copy of the Memorandum and Articles of Incorporation of the company, the Certificate of Incorporation issued by the Registrar of Companies, evidence that the agreed capital has been put in place and any other outstanding documentation previously identified as being necessary by CIMA.
  • For External/Exempt Insurers - CIMA has received the final copy of the Memorandum and Articles of Incorporation of the parent company and any other outstanding documentation previously identified as being necessary by CIMA.

When these documents have been filed with CIMA, the Class “A” Insurer’s Licence will be issued.

Forming a Class "B" and Class "C" Insurance Company

To establish a Captive in the Cayman Islands the Cayman Islands Monetary Authority will require a formal application for a Class "B" or Class "C" Insurer's Licence. This application is prescribed in the Insurance Act, and requires, inter alia, the following information:

  1. Name of applicant. This refers to the name that the Class “B” or Class "C" Insurer will bear, and should be pre-approved for use by CIMA and the Registrar of Companies.
  2. A detailed business plan
  3. Three years' financial projections
  4. Personal details and references for proposed directors and shareholders. A completed personal questionnaire should be provided in respect of ALL proposed Directors, Officers and Managers. A “police clearance certificate” is also required, but CIMA will accept a sworn Affidavit as an acceptable “other certificate.”
  5. Last two years' audited statements and/or notarised net worth statement of ultimate beneficial owners
  6. Confirmation of appointment from a Licensed Insurance Manager and Approved Auditor

The minimum capital requirement ("MCR") and perscribed capital requirment ("PCR") for a Class "B" and Class "C" licence are detailed in  the Insurance (Capital and Solvency) (Class B, C and D Insurers) Regulations as follows:

 

Class of Insurance Minimum Capital Requirement ("MCR")   Prescribed Capital Requirement ("PCR")
Class B(i)

General: US$100,000

Long-term: US$200,000

Composite: US$300,000

General: PCR = MCR

Long-term: PCR = MCR

Composite: PCR = MCR
Class B(ii)

General: US$150,000

Long-term: US$300,000

Composite: US$450,000 

General:

  • 10% of Net Earned Premium ("NEP") to first US$5,000,000
  • 5% of additional NEP up to US$20,000,000  
  • 2.5% of additional NEP in excess of US$20,000,000  
  • Long term: PCR = MCR
  • Composite: amount required to support the general business plus MCR 
Class B(iii) 

General: US$200,000

Long-term: US$400,000

Composite: US$600,000

General:

  • 15% of NEP to first US$5,000,000
  • 7.5% of additional NEP up to US$20,000,000  
  • 5% of additional NEP in excess of US$20,000,000

Long-term: PCR = MCR

Composite: amount required to support the general business plus MCR
Class C 

General: US$500

Long-term: US$500

Composite: US$500

General: PCR = MCR

Long-term: PCR = MCR

Composite: PCR = MCR 

Please note that there may be an additional regulatory capital requirement depending upon the business plan submitted.

The application fee for a captive, which becomes the first year's licence fee, is refundable if the licence is refused (see: Insurance Fees). This fee is payable annually before 15th January. A local insurance manager will be able to advise of any other fees associated with incorporating a company. The Cayman Islands is a tax-free domicile with no corporate or personal taxes.

It is a requirement of the act that all captive insurance companies appoint a local insurance manager. The insurance managers play an essential role in the control and regulation of the captive insurance industry and the Monetary Authority maintains a close working relationship with them. We would recommend that you contact one of these for further guidance.

The Licensing Process
  • The Insurance Supervision Division will review the application and raise questions if necessary, which can be directed to any appointed insurance manager, or other representative. Once CIMA is satisfied that the proposal is sound, a letter can be provided, addressed to the Registrar of Companies, in order for the company to be incorporated. Simultaneously, a submission for licensing will be made to CIMA's Management Committee ("MC").
  • The licensing process will take between one and four weeks, depending upon the completeness of the application.
  • If approved by MC, the licence will be issued subject to confirmation that CIMA has received the final copy of the Memorandum and Articles of Association of the company, the Certificate of Incorporation issued by the Registrar of Companies, evidence that the agreed capital has been received by the insurance manager and any other documentation previously identified by CIMA as being required.
Forming a Class "D" Insurance Company

To establish a Reinsurer in the Cayman Islands the Cayman Islands Monetary Authority will require a formal application for a Class "D" Insurer's Licence. The information required is detailed in the Class "D" application form. 

The minimum capital requirement ("MCR") and perscribed capital requirment ("PCR") for a Class "D" licence are detailed in the IInsurance (Capital and Solvency) (Class B, C and D Insurers) Regulations as follows:

 

Class of Insurance Minimum Capital Requirement ("MCR")  Prescribed Capital Requirement ("PCR") 
Class D

General:US$50,000,000

Longterm:US$50,000,000

Composite:US$50,000,000

Calculated as 100% of total of:

Cpremium (except catastrophe risk):  

Non-life Premiums: 15.0% of Net Written Premiums  

Life Premiums: 15.0% of Net Written Premiums

Creserve:

Non-life Reserves: 10.0% of Gross Non-life Reserves

Life Reserves: 5.0% of Gross Life Reserves

Casset:

Class 1 assets. 0.0%

Class 2 assets. 0.5%

Class 3 assets. 2.0%

Class 4 assets. 4.0%

Class 5 assets. 5.0%

Class 6 assets. 10%

Class 7 assets. 15%

Class 8 assets. 35%

Creinsurance: 5.0% of Total Ceded Unearned Premium Reserve

Ccatastrophe: 20% of a 1 in 100 year event; and 100% of a 1 in 10 year event;

Important 

In the event that a Company has reinsurance recoveries related to assumedreserves, a reduction to the Creserve will be allowed up to 100% of the any reinsurance recoveries if such recoveries are secured by letters of credit else a reduction of 95% for collateral approved by the Authority else a reduction of 90% if the recovery is from highly rated reinsurers else 50% for all other forms of reinsurance.

In the event that a Company has ceded unearned premium reserves, a reduction to the Creinsurance will be allowed up to 100% of the any ceded unearned premium reserves if such recoveries are secured by letters of credit else a reduction of 95% for collateral approved by the Authority else a reduction of 90% if the recovery is from highly rated reinsurers else 50% for all other forms of reinsurance. 

In the event that a Company has ceded catastrophe risk, a reduction to the Ccatastrophe will be allowed up to 100% of the any reinsurance recoveries if such recoveries are secured by letters of credit else a reduction of 95% for collateral approved by the Authority else a reduction of 90% if the recovery is from highly rated reinsurers else 50% for all other forms of reinsurance.

reinsurance recoveries related to assumedreserves, a reduction to the C

Please note that there may be an additional regulatory capital requirement depending upon the business plan submitted.

The application fee for a Reinsurer, which becomes the first year's licence fee, is refundable if the licence is refused (see: Insurance Fees). This fee is payable annually before 15 January. The Cayman Islands is a tax-free domicile with no corporate or personal taxes.

The Licensing Process
  1. The Insurance Supervision Division will review the application and raise questions if necessary. Once CIMA is satisfied that the proposal is sound, a letter can be provided, addressed to the Registrar of Companies, in order for the company to be incorporated. Simultaneously, a submission for licensing will be made to CIMA's Management Committee ("MC"). 
  2. The licensing process will take between one and four weeks, depending upon the completeness of the application. 
  3. If approved by MC, the licence will be issued subject to confirmation that CIMA has received the final copy of the Memorandum and Articles of Association of the company, the Certificate of Incorporation issued by the Registrar of Companies, evidence that the agreed capital has been received and any other documentation previously identified by CIMA as being required.
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