Friday, June 28, 2013
Friday, June 28, 2013
A leading captive insurance expert believes The Bahamas is positioning itself to become the “gold standard” for small and medium sized enterprises (SME) captives, some of which are structured as 831(b) companies.
Peter Strauss of The Strauss Law Firm LLC, who was the guest speaker at an insurance industry briefing June 26 co-sponsored by the Bahamas Financial Services Board (BFSB) and the Insurance Commission of The Bahamas (ICB), said The Bahamas has made tremendous strides in captives in just two years, comparing The Bahamas to the state of Vermont, which is well known within the captives industry.
His presentation “Why The Bahamas for captives” followed a series of briefings and updates by industry regulators and noted the primary advantages of The Bahamas as being competitive regulatory capital, accessibility, lifestyle and luxury options, deep and established financial infrastructure, and flexible regulation–all being conducive to a flourishing captives business.
Strauss pointed out that while most Fortune 500 companies already have captives, there are some 28 million small businesses in the US for whom a captive strategy would be viable.
He said there are only 2,000 captives established in that market to underwrite the risks of these businesses, and encouraged The Bahamas to seize the opportunity.
Strauss also detailed his plans to double the number of captives his firm now manages in The Bahamas within the next year.
“The Bahamas is quickly but quietly re-establishing itself as the jurisdiction of choice,” he said. “It will once again be competitive on a global stage.”
In opening remarks to industry stakeholders, Nicola Virgil-Rolle, director of Financial Services, brought greetings from Minister Ryan Pinder, assuring the Ministry’s full commitment to seeing growth within the insurance sector and in the captives industry in particular.
Superintendent of the ICB, Michele Fields, provided welcome remarks speaking to the regulator’s strategy of adhering to international best practices and ensuring an effective regime, with a focus on an integrated approach to the supervision of the domestic and international sectors.
Arvind Baghel, head of insurance supervision at the ICB, addressed participants on the “Supervisory standards for captives,” with a focus on the Insurance Core Principles (ICPs) as issued by the International Association of Insurance Supervisors (IAIS).
He stressed that The Bahamas prides itself on key components within the regulatory environment considered vital to sector growth, inclusive of flexibility, a streamlined process, adequate due diligence, investment discretion, while recognizing the need for a balanced view.
Jamell Bodie, manager of supervisory and regulatory practices at the ICB, presented a comprehensive overview of the “Risk-based supervision of captives and other external insurance companies.”
Her presentation included a focus on captive licensing requirements, and the roles of the resident representative and insurance manager.
She also provided an overview of the insurance market in The Bahamas, with particular relevance to external insurance and external intermediaries.
BFSB and the ICB are working collaboratively to reposition The Bahamas in the captives field, with a number of initiatives underway. Already this year, the regulator has partnered with BFSB to ensure that the jurisdiction has been represented at key industry conferences.