Renewed optimism for future growth

As we draw to the end of a year where we’re slowly adjusting to the “new norm”, Cayman’s insurance industry can reflect on a period that’s seen further growth, and continued evolution of the jurisdiction.

The global hardening of the insurance and reinsurance market experienced during 2021 has resulted in global commercial insurance rates increasing materially across all insurance coverages (particularly property; D&O, cyber and casualty lines) with further rate increases expected through 2022. This has resulted in sizeable new interest in captive establishment as business owners and enterprises seek to establish their own risk retention vehicles to retain risk in a controlled manner, protect themselves against certain exposures that the commercial market is no longer prepared to cover, and/or access reinsurance markets which a wholly-owned captive can facilitate.

The hardening markets have provided the jurisdiction with substantial growth. Cayman is projected to add some 40 new captives in 2021 which, after a number of consolidations, will increase Cayman Islands Monetary Authority (CIMA) captive insurance statistics noticeably.

Cayman continues to be the leading domicile for healthcare captives and it is expected to have licensed 10 new captives for US healthcare clients in 2021.

While consolidation in the US healthcare sector continues to reduce existing Cayman healthcare captive numbers those remaining (some 201 out of 650) have larger balance sheets, are writing a broader selection of parental risks and provide more support to their US parents than ever before.

Over the last 18 months, Cayman captives have sought new ways to support their health system parents and operations including:

COVID-19-related:

• Insuring hospital volunteers helping during COVID-19 crisis
• Insuring COVID-19 employee death benefits in programmes
• Use of risk management grants to fund COVID-19 training/education/PPE needs
• The use of premium holidays, loan-backs, and dividends to support parents

Hard market:

• Increased participations on client cyber liability & PD; EPLI (wage & hour); D&O side B; medical stop-loss programmes
• Increasing provision of access to facultative reinsurance markets

Cayman has also experienced significant success and growth in the class B(iii) reinsurance captive space (both non-life and life) over the last five years. From a non-life perspective property & casualty reinsurance pricing has increased significantly in recent years so US-based insurers (traditional and insurtech) and managing general agents are establishing affiliated collateralised reinsurance companies in a non-Solvency II environment to provide them with the necessary protection at preferential cost in a capital-efficient manner that can either replace and complement existing commercial coverages.Cayman has also seen an increase in the number of B(iii) long-term reinsurance captives who have established here for regulatory, infrastructure, investment flexibility and lifestyle reasons.

The jurisdiction has experienced 50 new B(iii) Cayman formations since 2017, which relates to a 33 percent growth in B(iii)s since 2017.

Cayman continues to attract captive interest from organisations that have existing Cayman ownership touch-points, whether that is via global operating companies (with US, Canadian, Hong Kong or Singapore-led operations) that have Cayman holding companies or via operating portfolio companies of the large private equity groups that have multiple funds registered in the domicile. The multi-faceted financial services industry continues to provide Cayman with a strong platform which the insurance industry can grow from.

Events

Closer to home, despite not being able to welcome overseas guests for two years, Cayman International Insurance (CII) events and Forum committees have excelled. The Events committee held the largest black tie gala dinner on record, raising over $42,000 for our Scholarship fund. The industry then turned out in force in support of the CII golf event, which broke records in raising over $11,000 for the fund.

At the time of writing, our Forum is due to be held virtually, enabling participants from all over the world to participate in a wide range of engaging topics while being able to receive valuable Continued Professional Development points. The geographical breadth of Forum registrations highlights the growing reach of Cayman’s insurance industry.

Filming is underway on a series of webcasts which will help provide some insight into the jurisdiction, and why Cayman is, and continues to be, the insurance domicile of choice.

With border restrictions being lifted, Cayman strides purposefully into 2022 with renewed optimism for future growth and development.

Martin Cooke is the director of Hyperion Insurance Management and chair of Cayman International Insurance’s marketing committee. He can be contacted at: martin.cooke@hyperion-risk.com