Hyperion Insurance Management

2020: A year we’ll not forget

Martin Cooke of Hyperion Insurance Management and chair of IMAC’s marketing committee, reflects on a challenging year and how Cayman’s insurance industry is emerging stronger than ever.

“The positive relationship the industry has with CIMA is reflected in the projections of new formations.”

Martin Cooke, Hyperion Insurance Management

It’s December 9, 2019. Cayman’s international insurance industry is in full flow as the end of the year approaches. Buoyed by the success of the biggest Cayman Captive Forum in history, the industry is optimistically looking forward to another bumper year of new captive formations, increased premiums and continued diversification within the industry.

Captive insurance industry participants have travelled far and wide to meet clients and attend conferences, further broadening Cayman’s offering as a jurisdiction.

Fast-forward a year to December 9, 2020. It’s been quite the year. Lockdowns are the new normal. Travel is restricted, with some international borders remaining closed. Anyone braving travel must quarantine for 14 days.

Closer to home, Cayman’s tourism industry has been decimated. The newly extended airport is deserted. The streets of George Town remain quiet from the usual hubbub of foot traffic of cruise passengers exploring what hidden gems are on offer.

In late August 2020, the Insurance Managers Association of Cayman (IMAC) executive committee took the decision to postpone the Cayman Captive Forum. It would therefore be easy to assume that the insurance industry has had an equally turbulent time.

In the face of adversity

Despite the apparent despair, industry association Cayman International Insurance (CII) is emerging from 2020 like a phoenix from the flames. Stronger than ever, the jurisdiction is using the past 12 months to further develop and add additional sophistication to an already well-established and respected industry.

In spite of office closures and staff being forced to work a large portion of the year from home, interface with the Cayman Islands Monetary Authority (CIMA) has increased. IMAC’s executive committee held routine meetings internally and with the insurance division of CIMA on a near-monthly basis following the lockdown.

CIMA has been extremely proactive in its approach to client interaction, with Zoom and Teams calls a regular feature of the COVID-19 times.

This was warmly received by the industry. The positive relationship the industry has with CIMA is reflected in the projections of new formations. As at December 14, 2020, CIMA had issued 31 new insurer licences in 2020. These include 27 class Bs, two class Cs and two class Ds. At the same date, CIMA has issued nine new portfolio insurance companies (PICs) in 2020. Five approved licence applications and six new applications are being reviewed. This is compared to 33 new licences issued in 2019.

As at September 30, 2019, the industry reported total premiums of $18 billion, and total assets of $68 billion. Fast-forward 12 months and the total premiums have risen by 16.6 percent to $21 billion, and total assets to $74 billion—a growth of 8.8 percent.

“The Cayman Islands was removed from the EU’s list of non-cooperative jurisdictions for tax purposes.”

Key regulatory updates

The industry’s positive relationship with the regulators is not restricted to the new business applications. From a regulatory standpoint, IMAC has continued its involvement in consulting with the government and CIMA on legislation and regulations that impact our industry. Given the rapid increase of regulation over the past few years and what appears to be no slowdown in that process, industry involvement in this process is vital.

In 2020 a number of new regulations have come into force. Cayman has launched its guidelines on economic substance filings and the Department for International Tax Cooperation (DITC) portal has gone live. The Administrative Fines (Amendment) Regulations have been enacted, and a statement of guidance issued on cybersecurity issued.

Economic substance

In October 2020 the EU joined other respected international entities such as the Organisation for Economic Co-operation and Development in identifying the Cayman Islands as a transparent jurisdiction without harmful tax regimes. On October 6, 2020 it was announced that the Cayman Islands was removed from the EU’s list of non-cooperative jurisdictions for tax purposes after continued efforts by the Cayman Islands government and wider financial services industry to resolve all outstanding issues.

The Cayman Islands is now deemed a cooperative jurisdiction following its being added to the EU’s list of non-cooperative jurisdictions for tax purposes in February 2020.

The final guidance notes were issued in July 13, 2020. Following this, the DITC portal has been activated. Relevant entities carrying on relevant activities that had economic substance filings due by December 31, 2020, now have until February 28, 2021 to submit their filings. Entities that are tax-resident in another jurisdiction have until February 28, 2021 to submit their filings.

The DITC portal has also opened for registrations of outsource service providers (OSPs). OSPs should register in order for the Tax Information Authority to consider the OSP’s services, provided to any relevant entity, in the assessment of whether that entity has satisfied the economic substance test.

While there is no fixed date for the filing of this form, it should be filed by the OSP before an economic substance return is made which claims outsourcing of the core income-generating activities to the OSPs.

Where the OSP is not registered, the outsourcing claim made by the relevant entity cannot be considered when assessing whether that entity has satisfied the economic substance test.

“Entities that are tax-resident in another jurisdiction have until February 28, 2021 to submit their filings.”

Administrative Fines (Amendment) Regulations

CIMA has implemented the Monetary Authority (Administrative Fines) (Amendment) Regulations, 2020, which came into effect on June 26, 2020.

These regulations provide CIMA with the authority to impose an administrative fine on a person or entity who breaches a provision prescribed in the regulations.

The category of breach and single fine are as follows:

  • Minor breach: These are breaches for which a non-discretionary fine is issued by CIMA. Where the conditions in the Administrative Fines Regulations are met, CIMA will apply a fine for those breaches. A fine for a minor breach is fixed at KYD 5,000 ($6,097.50). Continuing fines for minor breaches is capped at KYD 20,000 ($24,390)
  • Serious and very serious breaches: CIMA has the discretion to determine whether to apply a fine and the amount of such fine. For serious breaches, the maximum fine amount is KYD 50,000 ($60,975) for an individual and KYD 100,000 ($121,950) for a body corporate. For very serious breaches, the maximum fine amount is KYD 100,000 ($121,950) for an individual and KYD 1,000,000 ($1,219,500) for a body corporate.

The Rule and Statement of Guidance—cybersecurity

This Statement of Guidance (SOG) was gazetted on May 27, 2020 and required regulated entities to be in compliance with same by November 27, 2020.

For insurers, classes B, C, & D fall within the scope of the Rule & SOG. However, under section 5.4 of the Rule & SOG, CIMA recognises that certain regulated entities are fully managed by a licensed service provider. Furthermore, these entities might not develop their own cybersecurity framework but rather rely on the framework of their service provider (insurance manager in the insurance industry).

Such regulated entities that are managed by an insurance manager and rely on their framework must make appropriate enquiries, through their governing body, to satisfy themselves with the level of cybersecurity applied by that service provider.

“Despite possible negative financial repercussions from the COVID-19 pandemic, IMAC was able to commit the annual $160,000 grant to its scholarship fund.”


Despite possible negative financial repercussions from the COVID-19 pandemic, IMAC was able to commit the annual $160,000 grant to its scholarship fund—a fund dedicated to providing young people with the opportunity to study abroad: to gain knowledge, experience, confidence and a fresh perspective and to use this experience to build their careers and to enrich their lives and communities.

To date, our scholarship fund has raised over $4.7 million and supported 54 young Caymanians pursue further studies around the globe in disciplines as diverse as business management, arts and the sciences.

Closer to home, but continuing on the theme of education, CII partnered with the International Center for Captive Insurance Education to assist in providing educational content to its membership. IMAC has recently hosted the first in a series of webinars/educational sessions, providing Cayman’s insurance industry with education credit points through monthly sessions on varying topical subjects

What may be seen as a fitting finale to 2020 for CII, the annual golf tournament had a record turnout, bringing together 108 golfers to network and raise funds for the scholarship fund. Co-sponsored by Grant Thornton and Scotiabank, the net proceeds of the event are expected to be just shy of $12,000.

2020 has certainly brought its challenges. However, rising high above these is the Cayman Islands: a domicile that is mature and well respected, yet dynamic as it continues to evolve to meet the demands of the global clientele it serves. A domicile of excellence for international insurance and reinsurance business.

Martin Cooke is the director of Hyperion Insurance Management. He can be contacted at: martin.cooke@hyperion-risk.com

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