Adapted from the 2011 edition of the Bahamas Handbook

Responsibility for the prudential regulation of insurance activity in or through The Bahamas rests with the Insurance Commission of The Bahamas (formerly the Office of Registrar of Insurance Companies). It is concerned with the ongoing monitoring and control of insurers, agents, brokers, salesmen and, internationally, underwriting managers and external insurers.

All local insurance operations (as distinct from offshore, or captive, insurance) are covered by the Insurance Act, 2005, which was amended in 2009. Registered insurers writing local business pay a premium tax of 3% of gross premiums collected each quarter.

Offshore insurance
An offshore insurer is an insurance company that is either incorporated in The Bahamas under the Companies Act, 1992, or incorporated elsewhere but registered under The Bahamas Foreign Companies Act and:
1. is registered under the insurance laws of The Bahamas;
2. insures only risks located outside The Bahamas; and
3. manages its business from within The Bahamas.

The Bahamas offers a convenient and professionally administered location for such operations. There is a well-equipped and capable regulatory office (the Insurance Commission of The Bahamas) and an adequate professional infrastructure to support such business as may materialize.

The activity of offshore insurance companies is regulated by the External Insurance Act, 2009.

Commission’s requirements
Before an offshore company may be registered, the Insurance Commission of The Bahamas must be satisfied with:
1. fitness of key parties to engage in the proposed operation;
2. business ethics involved;
3. feasibility of the planned business; and
4. security of outward reinsurance.

This process may be facilitated by introductory meetings between the applicant and the Commission.

Both insurance laws lay down the minimum capital and surplus requirements with requirements for external insurers based on the nature and scope of business presented. The Commission would not expect to see less than $100,000 for general business, $200,000 for long-term business and $300,000 for combination of risks.

Once licensed, the insurer is subject to important ongoing reporting requirements. In addition, the External Insurance Act calls for submission of certain statutory statements indicating compliance with the terms of registration.

All offshore insurers incorporated in The Bahamas are expected to operate through one of the registered underwriting managers. There are currently 10 such management companies registered, all of which operate out of Nassau.

As of March 2010, 25 companies were registered under the External Insurance Act, 2009.

For copies of insurance laws and regulations, contact Government Publications, PO Box N-7147, Nassau, tel (242) 322-2410 or visit www.icb.gov.bs.

Captive insurance
The captive insurance industry is governed in The Bahamas by the External Insurance Act, 2009. The Act allows companies to underwrite business from outside The Bahamas, confers advantageous solvency margins and allows captives to trade in any currency (except Bahamian).
Other provisions of the Act include a confidentiality clause to protect the policy holder and tax exemptions fora period of 15 years from the date of first registration.

Captive insurance companies– alternative providers of protection against the risk of damage or loss and third-party liabilities–differ from traditional firms in the nature of risks they underwrite or reinsure. They minimize the cost of risk management and may substantially reduce, or even avoid, other expenses such as administration and settlement of claims, loss control expenses, brokerage commissions and other acquisition costs and consulting fees.

Captives also allow self-insurance of a company with a better loss history than its industry average, plus centralization and tailoring of a company’s risk management programmes to improve loss control efficiency. They offer cash flow benefits; access to the reinsurance market; wider coverage than the conventional market–such as providing coverage for a new or potentially hazardous product–and the chance to diversify into open-market insurance services and generate profits from outside or unrelated business.

Annual fees payable by captive insurance companies in The Bahamas:
Unrestricted External insurer $3,500
Restricted External insurer $2,500
External Insurance broker $1,000
Underwriting manager $1,000

For more information contact the Insurance Commission of The Bahamas, Charlotte House, Charlotte and Shirley Sts, PO Box N-4844, Nassau, tel (242) 397-4100, fax (242) 328-1070, email info@icb.gov.bs or visit www.icb.gov.bs.