Responsibility for the prudential regulation of insurance activity in or through The Bahamas rests with the Insurance Commission of The Bahamas (ICB). It is responsible for the ongoing supervision and regulation of insurers, agents, brokers, salespersons and external insurers and intermediaries.

All local insurance operations (as distinct from offshore, or captive, insurance) are covered by the Insurance Act, Chapter 347, which was amended in 2009. Registered insurers writing local business pay a premium tax of 3% of gross premiums collected each quarter.

As of Dec 2011, there were 22 active domestic insurers licensed to write local business. In support of this activity, there were 53 agents and brokers, 26 sub-agents and four brokers.

Domestic insurance companies, agents and brokers are members of the Bahamas Insurance Assoc.

The ICB is a member of the International Association of Insurance Supervisors (IAIS) and endorses supervisory and regulatory requirements of the IAIS Insurance Core Principles. The ICB also maintains membership of other regional and international bodies including the Caribbean Assoc of Insurance Regulators (CAIR) and Offshore Group of Insurance Supervisors (OGIS).

Offshore insurance and captives
An offshore insurer is an insurance company licensed and regulated under the External Insurance Act, Chapter
348. It is incorporated in The Bahamas and manages its business from within The Bahamas but only insures risks located outside The Bahamas. As of Dec 31, 2011, there were 13 insurance companies, five insurance managers and three brokers registered under
this Act.

Under the Act, captive insurance companies are classified as “restricted external insurers” and mainly underwrite the risks of related entities.

The Bahamas offers a convenient and professionally administered location for captive insurance companies. There is a well-equipped and capable regulator in the ICB and a professional infrastructure to support such business.

All offshore insurers licensed in The Bahamas are required to appoint a resident representative, who is often one of the licensed insurance managers and maintain books and records in The Bahamas. Before an offshore company may be licensed, the ICB must be satisfied:

1. the company is managed, owned and controlled by persons who are fit and proper;
2. its business plan is acceptable to the ICB;
3. adequate books and records will be maintained in The Bahamas;
4. there will be adequate management and control of operations; and
5. there will be adequate capital to support the business.

Once licensed, the insurer is required to meet annual reporting and audit requirements.

The minimum capital requirement for a licence is $100,000 for general business and $200,000 for long-term business. However, the ICB will require companies to maintain a level of capital commensurate with the size and risks of the operations. Other provisions of the Act include a confidentiality clause to protect the policy holder and tax exemptions for a period of 15 years from the date of first registration.

Interested parties are encouraged to arrange a meeting with the ICB prior to applying. Insurance managers can provide assistance with the licensing applications, ongoing management services and regulatory requirements. There are currently six licensed insurance managers.

Captive insurance companies are alternative providers of protection against the risk of damage or loss and third-party liabilities. They 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. Captives also 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 under the External Insurance Act Chapter 348:
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) 397-4183, fax (242) 328-1070, e-mail info@icb.gov.bs or visit www.icb.gov.bs.