Rolling with the punches
Wherever there is business, there has been a crisis related to the COVID-19 pandemic. Some places have adapted better than others, and few have coped better than Cayman. Captive International reports.
When the COVID-19 pandemic started to spread around the world, Cayman was quick to act. It stopped flights and cruise ships coming in and out of the island, implementing what was essentially a social distancing policy on an international scale. This policy has remained in place ever since: in December 2020 travel to the island remained restricted, with only those who own property or have family living in Cayman allowed in.
By the time Cayman was closing its airport in March, restricting movement in and out of the country was not enough. COVID-19 had already found its way to the island and the government needed to control its spread throughout the local population. The government implemented a curfew that meant only essential workers were permitted to leave their homes, unless it was to do necessary shopping.
Even in those instances freedom of movement was restricted, with people allowed to visit shops on different days according to the first letter of their names.
Kevin Poole, deputy managing director for the Cayman Islands at Artex, points out that the island’s size gave it a significant advantage.
“Cayman is a relatively small community, so it has been easier for the government to control the situation,” he says.
People in Cayman report that the police were very effective in enforcing the rules, although there was significantly less push-back from residents than there was in the US, for example. Wearing masks never became the political issue it did in the US, and for the most part people were willing to comply with the rules set out by the government.
For its part, the government won plaudits for keeping residents and businesses well informed, ensuring people bought into the restrictions being imposed on them. The Premier, the Governor, the Minister for Health, the chief medical officer, and the police commissioner conducted daily press briefings to ensure that everyone remained calm and up to date with everything that was going on.
By June, Cayman was effectively COVID-19-free. It has largely remained so, with a few cases among people who have been detained in quarantine. There have been no known cases of community transmission. The only fatality from has been a single cruise ship passenger who passed away before the island was locked down.
“Cayman is absolutely slammed with new business at the moment and CIMA has been issuing lots of new licences.”
Dara Keogh, Grant Thornton
Back to normal
Dara Keogh, managing partner at Grant Thornton in Cayman, says: “We followed something similar to the New Zealand model. Now life is almost normal: we have seen gatherings of up to 500 people at outdoor events, and most people are back in their offices. The government was amazing. They put people’s lives before tourism, business or anything else.”
Cayman’s economy did not escape the pandemic unscathed, however: the tourism industry took a huge hit, with the absence of cruise ships and leisure visitors, and business travellers not making an annual pilgrimage to the island for board meetings. The insurance industry, however, proved its adaptability, with employees in this sector dispersing to their homes where they continued working, without missing a beat.
“Clients have not been able to come to Cayman and there has certainly been a big impact on the tourism industry, hotels and restaurants,” says Poole. “The financial services sector has been robust and is doing what it can to help. A lot of us have continued to eat out or order deliveries from restaurants, and many have been taking vacations this year around Cayman, staying at local hotels.”
The Cayman Islands Monetary Authority (CIMA), the regulator of financial services in the Cayman Islands, proved its responsiveness and adaptability in the way it responded to the crisis, making provisions for board meetings to be held virtually, for example.
“Virtual board meetings have allowed businesses to keep their schedules as they were in most cases,” says Poole. “Meetings have been less personal than they were before, but on the other hand they have been much quicker: meetings that would have taken all day have often been completed in a couple of hours.”
Silver linings This is one example of changes related to COVID-19 having a positive impact—or at least a silver lining.
“In the long term there is a bit of a risk that people may prefer to continue doing virtual meetings, and we may get fewer people visiting Cayman,” admits Poole.
“But I think most people will be keen to return when they are allowed to because clients enjoy visiting Cayman, plus this also helps captive insurance clients comply with economic substance requirements.”
CIMA considered allowing deadline extensions for regulatory filings, notes Keogh, in acknowledgement of the disruption COVID-19 was causing.
“In the end it was decided formal extensions were not widely needed because businesses were operating largely as normal,” he says.
“Instead they said they would be flexible on a case-by-case basis, should anyone have any problems meeting their filing deadlines.”
While CIMA was willing to show flexibility, the fact was that businesses were coping with the challenges that the pandemic was throwing at them.
“Cayman’s insurance industry is mainly based on international business so it was already very well digitally connected,” explains Keogh.
“Insurance managers and others in the industry have adapted very well with little or no disruption to business.”
In most cases clients probably would not have noticed there had been a change, but for the fact that most of them had also been forced to work from home, regardless of where they happened to be in the world. Captive managers, auditors, lawyers, and re/insurers remained open for business, with Cayman serving as a clearing house for risk just as it always had. Businesses in Cayman say, as 2020 draws to a close, that business is booming.
“Cayman is absolutely slammed with new business at the moment and CIMA has been issuing lots of new licences,” says Keogh.
“In the last few quarters registrations have been in the double digits—we could see Cayman set a new record.”
“Cayman has introduced a new ‘Digital Nomad’ visa for people who want to settle in Cayman and work from home.”
Interest from elsewhere
With its strong business ties to other business and financial centres, the quality of Cayman’s response has not gone unnoticed.
“We have seen increased interest from financial services professionals looking to relocate to and seek work in the Cayman Islands, especially from people from the UK and Ireland,” says Keogh.
To satisfy some of this demand Cayman has introduced a new ‘Digital Nomad’ visa for people who want to settle in Cayman and work from home. Arrivals must quarantine for 14 days, either at a private residence with a smart tracking device to ensure compliance, or a government facility. Once that has been completed people are free to move around the island with no restrictions.
Keogh believes Cayman could see a huge influx of high net worth individuals in particular. “The high end property market has been extremely hot, there are reports of people buying properties off lists without even viewing them,” he says.
“Cayman offers a great retreat for people who want to get away from COVID-19.”
While life on Cayman has been able to return to something closer to normal than anyone in urban centres such as London or New York has seen, the pandemic has had an impact on the office dynamic. People may have been able to stop working from home sooner in Cayman than elsewhere, but the experience of working from home has had an impact on employees and employers.
The response has not been the same across all businesses, and varies in part depending on the type of business companies are engaged in, and how important face-to-face meetings are to those businesses. Some businesses have gone back almost to pre-COVID-19 “normal”, with most people coming into the office. Others have embraced the new working arrangements and have no plans to bring everyone back into the office.
Poole says: “At Artex we are all back in the office now and the same seems to be true for a lot of other offices, including government offices and law firms. There is still some flexibility, if people want to work from home such as for childcare reasons they can, but most people were keen to get back to the office after such a long time away working from home.”
Grant Thornton is closer to the other end of the spectrum and does not envisage things going back to how they were before the pandemic struck. It has moved away from the model of people working nine to five in the office, Keogh says, with most people either working from home or working only some of the time in the office.
“We have moved to more of a hot-desk system,” explains Keogh. “That will allow Grant Thornton to increase its headcount by over 50 percent over the coming year without needing to move to a bigger office. We have converted some of the former offices into meeting and board rooms so staff have a place to meet each other and clients when necessary.”
Grant Thornton now encourages people to come in at least a few days a week if they can, Keogh says, to increase collaboration.
“We have asked people to come in more during our current audit planning season but will revert to the hybrid model again in the new year as it offers the best of both worlds,” he adds.
Keogh argues that COVID-19 served as a catalyst for trends that were already happening, but very slowly. Workers wanted more flexibility, and companies were looking for ways to offer it, but they were never quite confident enough to implement what, before the pandemic struck, would have been seen as radical measures.
“Technology and people’s desire to work more time on a remote basis was already there,” says Keogh. “COVID-19 has pushed businesses to make these changes and it turned out to be easier than expected.
“The technology has been there to make these changes for a long time but it was the culture that was harder to change. This year has shown that it works.”