For many years, the Cayman Islands has had continually battle against the misconception of their role in the international finance world as being one of banking secrecy and tax havens.
The reality is actually very different, with Cayman being recognised by the OECD and other similar agencies as adopting a legislative and regulatory structure that meets the very highest of international standards as a means of combating money laundering and tax evasion.
One key factor in ensuring the jurisdiction’s hard-fought reputation as one of the world’s leading international finance centers is the professionalism, diligence and experience of its service providers.
Moreover, and with specific regard to the insurance industry, to maintain its position as a leading captive, reinsurance and ILS domicile, it is imperative that Cayman’s Insurance Managers must continue to evolve and diversify our product offering.
Long regarded as the premier destination for US healthcare business, Cayman has more evolved into a high-class international insurance and reinsurance center. This is borne out of a harmonious blend of Government support and the regulators constant dialogue and collaboration with the private sector to continuously enhance the jurisdiction.
Cayman’s private sector in itself is extremely diversified – with a wealth of internationally experienced lawyers, accountants, bankers and investment managers. Again, turning to the insurance sector, Cayman offers a plethora of expert Insurance Managers, ranging from the large, broker owned firms, to independent, boutique practices, specialising in new solutions and program design.
As a whole, the services providers in Cayman are integral to why the jurisdiction remains preeminent in the global insurance industry. Cayman’s insurance sector is complimented by one of the world’s largest global investment fund industries, a strong trust and fiduciary sector, vibrant private banking landscape and burgeoning company incorporation numbers. As a result, the Cayman Islands continues to strive by providing its clients with access to value-added by-products that enhance our offering.
Over the past decade, competition from both US and other international domiciles has increased dramatically – so Cayman must continue to stay at the top of its game if we are to remain at the forefront of risk managers minds during the domicile selection process. Cayman’s Insurance Managers are ultimately responsible in meeting this challenge – which is one we relish. As a fundamentally long-term financial and risk management structure, captives and other insurance vehicles need jurisdictions that do not stand still and adapt meet the needs of an ever-changing corporate environment.
The Insurance Manager arguably assumes a captive insurer’s most important role – by providing their direct representation to the Cayman Islands Monetary Authority (CIMA), the local regulatory body. Furthermore, we are tasked with ensuring diligent corporate governance and regulatory compliance and full-service accounting functions are normally included within the management services agreement.
Essentially, Insurance Managers are tasked with maintaining a constant balance which ensures that their clients meeting the growing requirements of regulatory oversight, while assisting the client to maximising commercial opportunities. Excellent client service and responsiveness also remains vital – with business decisions being even more time critical in this digital age.
Notwithstanding the aforementioned, what often sets Cayman apart from its competitors is the ability of its service providers to afford their captive clients with greater value-added services. These include everything from unique loss mitigation solutions, to innovative reinsurance program design and loss portfolio transfer solutions.
Although the wider international insurance industry is starting to embrace technology and blockchain led solutions, the captive insurance industry has been somewhat left behind in this regard to date. This needs to change. Technology is increasing access to innovative solutions and should be embraced with open arms.
Loss mitigation solutions and controls offer a good example of additional value to its clients. Insurance Managers must look to the providers of solutions to the commercial insurance sector and see how these might benefit their clients.
To give just an example, Cayman has a large number of captives whose core business is US Workers Compensation or other business lines with an exposure to US medical over-billing. Therefore, we have aligned ourselves with a service provider that specializes in cost efficient software for claims repricing that utilizes provider-specific benchmarks with geographic data to create a true and defensible “fair market price” for each medical services and procedures.
The multiple benchmarks used include previously accepted rates, geographically-specific Medicare rates, state Worker’s Compensation rates, cost-to-charge ratios, Tricare reimbursement rates, hospital-reported financial data, National Correct Coding Initiatives Edits (NCCI), and more to establish fair market pricing data.
This analysis regularly yields our customers discounts of 45-55% of billed charges compared to the 10-15% with PPO Network discounts or UCR Re-Pricing methods. Given how the data is sourced, the appeal rate is around the 0.08% mark.
This pricing method is therefore perfect for Workers Compensation audits. Combined with line-by-line review of every bill, significant results can be achieved. Coupled with a contingent-based fee structure (based on a percentage of recoveries) means the captive has no financial risk or upfront fees for the service.
Insurance is clearly not the only means of cross-selling we have at our disposal. Once in Cayman, a client’s perception of the offshore world can change from one of a functionary monoline captive jurisdiction, to one of a value-added, professional business hub. A hub that can service all of their corporate, wealth and estate planning, all sourced directly from through internationally experienced professionals that fully understand their needs and requirements.
More specifically, never before has the relationship between the fund and insurance industries been so close. Cayman offers its clients the ability to take full advantage of Cayman’s experience in the convergence and Insurance Linked Securities (ILS) sector for the benefit of both investment managers and investors alike. In fact, Cayman’s unique standing as a leading player in both industries, puts the jurisdiction in an enviable position.
The continued collaboration of the private sector across all industry sectors is imperative if the jurisdiction is to continue its evolution and growth. Furthermore, Cayman’s Insurance Managers must give consideration to offering invaluable products and solutions, both traditional and non-traditional in order to remain as a dynamic insurance marketplace.
In Cayman we recognize that our products are merely our tools. Innovation and sophistication are the driving forces of success. Thankfully, Cayman’s unique set of Insurance Managers and wider professionals remain committed to working to constantly improve our offering – ensuring that the Cayman Islands remains a leading financial services provider for many years to come.