|The Bahamas Investor Magazine
January 1, 2017
January 1, 2017
In addition to a well-established domestic insurance market, The Bahamas has a recognized presence in the international marketplace. Over the past three years, the external insurance sector in The Bahamas has been growing at an unprecedented rate, particularly in the captive and life insurance arena. The Bahamas, through a robust legislative framework and financial services expertise, continues to provide a market for international small and medium-sized entities to establish captives as a part of their risk management framework and risk financing programmes.
The Insurance Commission of The Bahamas has licensed medium and small captives including investor and association captives. As companies internationally begin to focus more on risk management and seek alternative risk transfer and risk financing solutions outside of the traditional insurance and reinsurance markets, the captive product is growing in popularity.
Alternative risk transfer solutions allow companies to capitalize on the benefits of implementing efficient risk management programmes. Companies can form captive insurance entities to access reinsurance markets directly or to complement their traditional insurance programmes in a more cost efficient manner. Furthermore, small captive entities in some jurisdictions may also provide some tax benefits to their shareholders or parent companies.
The number of external life insurance companies has been increasing at a steady pace over the last few years. Variable annuity and variable insurance products, particularly unit linked insurance policies, have been a profitable line of business for these entities, whose policyholders are based in various jurisdictions around the world. The commission anticipates that it will continue to receive applications to establish more of these types of insurance entities, as high-net-worth individuals are increasing their use of insurance products as a part of their wealth management strategy.
Forming an external insurance company, including a captive, in The Bahamas provides a financially safe and sound platform for those entities desiring to take advantage of the synergies within our financial services sector. Given The Bahamas’ rich history and success in the banking and trust sectors, the country has, over the last few decades, developed significant expertise in financial services and the related ancillary services, which can be leveraged by the international insurance sector.
Representatives of the commission attend local and international conferences and workshops with respect to insurance supervision generally, however, the commission’s staff also attend captive and risk management conferences to stay abreast of developments and trends affecting the captive insurance industry, in order that the commission may respond appropriately via its supervisory activities.
The commission also subscribes to several captive magazines and maintains membership in the Risk Management Society (RIMS), which is the largest global risk management society in the world. Staff of the commission who supervise captives are at various stages of completing captive or risk management specific designations and/or certifications. The commission continues to cultivate human resources with the knowledge, exposure and skills to effectively and efficiently supervise the international insurance industry, which operates from within The Bahamas including the burgeoning captive market.
National Health Insurance
The National Health Insurance Act, 2016 was passed into law on August 29, 2016. This Act provides for the establishment of National Health Insurance (NHI) in The Bahamas. The fundamental premise of the NHI initiative is that eligible legal residents have equitable access to a defined health service package at no cost to the individual. The NHI plan will be administered by Regulated Health Administrators (RHAs) who must first be registered long-term insurers under the Insurance Act, 2005. For the avoidance of duplication of regulation and supervision of these entities, the commission will certify and supervise the RHAs.
As the government continues to implement the various phases of NHI, the domestic health insurance sector must find innovative ways to tailor its business strategy to complement and supplement the NHI programme. The NHI Secretariat, which is responsible for the NHI plan in the first instance, and the commission continue to engage the stakeholders in the local insurance industry, as details of the way forward are finalized. Amendments to the Insurance Act, 2005 are being finalized, in order to facilitate the regulation and supervision of the RHAs. The secretariat is currently drafting regulations to provide more details regarding the role and responsibilities of RHAs and the benefits under the NHI plan.