Captive Review digs into official CIMA statistics between 2020 and 2024 to pick out what has driven growth in Cayman’s captive insurance market
The Cayman Islands has been a major beneficiary of the hard market period of the last few years, according to statistics for the domicile.
Using official insurance figures obtained from the Cayman Islands Monetary Authority (CIMA), Captive Review has compiled a detailed report on Cayman’s captive growth story from year-end 2020 to the end of Q3 2024, and assessed the trends and changing dynamics within Cayman’s captive insurance market during this time. Key growth figures for the period are shown below.
Key growth figures Q4 2020–Q3 2024
There has been growth in Cayman across all types of traditional captive insurance companies, which we count as pure captives, group captives and segregated portfolio companies (SPCs). Comparing figures from December 31, 2020 to September 30, 2024, there are now 12 more pure captives, six more group captives and six more SPCs.
Premium has risen across all captive types in that time: pure by $1.6 billion, group by $1.4 billion, and SPC by $3.3 billion. Additionally, assets value has risen by $4.0 billion for pure captives, $3.6 billion for group captives, and $9.4 billion for SPCs.
These numbers amount to 4.4 percent number growth, 66.6 percent premium growth, and 46 percent asset growth in Cayman’s captive insurance market since the end of 2020.
Within Cayman’s wider international insurance sector, which consists of the three captive types as well as commercial insurers, reinsurance companies and special purpose vehicles, there has also been strong growth. The total number has risen from 652 to 696 in the time period, while total premium has risen from $20.9 to $42 billion and assets value has risen from $70.8 to $154 billion.
Cayman’s captive insurance market data
Current state of the market
Of the 696 international insurance companies (IICs) at Q3 2024, 569 were captives. There were 293 pure captives, 131 group captives, 145 SPCs, 94 reinsurance companies, 16 commercial insurers and 17 special purpose vehicles.
Cayman is the third-largest domicile in the world by number of captives. Only Vermont, with 678 captives at Q3 2024, and Bermuda, with 631 captives at the end of 2023, have more.
To the end of September, there had been 19 new captives formed this year in Cayman—eight pure captives, two group captives and nine SPCs.
In total 29 new licences were issued by CIMA to IICs in the first nine months of the year, while 16 were cancelled.
This puts it on par with recent years. In all of 2023 there were 41 new IICs formed (including 26 captives), and 28 licences cancelled. On average 36.75 IICs formed per year between 2020 and 2023, and 27.5 had their licence cancelled.
Captive class licence update 2024 (up to Q3 end)
Captive managers
Obtained data on Cayman’s market delivers some valuable information on the growth of captive managers in the domicile.
In 2024, SRS has overtaken Marsh as the largest manager of IICs by number, after a significant jump from managing 106 at the start of the year, to 115 by the end of September.
Jenny Pooley, managing director of SRS Cayman, told Captive Review that SPCs had been especially important to growth in the domicile.
“There has been substantive growth in SPCs, allowing for more innovative uses for the captive and a wider participation from different insureds,” she said.
“The SPC legislation allows a great deal of flexibility in structure and use of the SPC and its cells, without onerous additional regulatory requirements.”
Nine different managers have successfully assisted in the formation of a new captive this year, including all the large global managers, plus companies with a strong local presence in Cayman.
These widespread successes have enabled a thriving captive insurance industry to develop in Cayman, and James Trundle, vice president of Cayman-based captive manager Global Captive Management (GCM), told Captive Review that this was a significant reason Cayman has been able to continue growing.
“The principal driving factor for any organisation looking to set up a Cayman captive is the access to experienced managers, auditors, tax advisors, attorneys and actuaries who truly understand the captive insurance model,” he said.
“This, coupled with appropriate regulation and open communications between captive owners and the regulator, continues to drive Cayman forward as the number one choice as an offshore domicile.”
Cayman’s captive managers
Growth trends
Cayman has long held a reputation as a specialist domicile for healthcare institutions—a point well-demonstrated by the most popular classes written by Cayman captives over the last five years. Around 24 percent of Cayman’s IICs had medical malpractice liability as their primary class of business in 2020, and it remained the most popular primary class of business among Cayman IICs in 2021.
However, the impact of global market trends are reflected in Cayman’s figures, as classes such as workers’ compensation, property and general liability have driven the greatest growth in Cayman since 2020.
From 2022, workers’ compensation has been the primary line of business written by the most Cayman captives, as more US firms acknowledge the benefits of writing this profitable line through their own captive. Meanwhile, despite the number of IICs growing every year, fewer have medical malpractice as their primary class of business.
“Cayman continues to see significant growth in the single parent sector in industries from outside the traditional healthcare space,” Trundle said.
“In the last six months, GCM has worked on establishing new single parent structures for construction companies, oil and gas producers and church organisations.”
The hard property market has led many captive owners around the world to take more of this exposure into their captive, and Cayman certainly appears no different. Premium written by IICs with property as its primary class has grown exponentially over the last five years—from just under $1.7 billion in 2020 to over $7.2 billion in Q3 2024.
Social inflation and the increasing cost of nuclear jury verdicts in the US has also led to sharp increases in liability premiums—and the figures show more Cayman IICs writing general liability as their primary class of business.
Primary class of business: premium change
Healthcare
Healthcare remains an important part of Cayman’s market. While lines such as workers’ compensation, property and general liability have risen in importance among Cayman’s captive owners, at Q3 2024 20 percent of Cayman’s IICs still had medical malpractice as their primary class of business—136 companies.
Despite this number falling year on year, the premium written by this group of captives has risen, and was at $3.2 billion at Q3 2024, compared to $2.7 billion in 2020.
“There has been an increased interest in a broader range of coverage lines, but overall, healthcare captives still represent a significant portion of total licences in Cayman,” Pooley said.
She said there were growing opportunities for Cayman captives to step in where the commercial market denies or carves out coverage for a particular subset of risks, and highlighted sexual abuse and molestation coverage for healthcare systems as a good example of this.
“I expect healthcare still to play a major part in the Cayman captive industry in the next few years with the unprecedented mega verdicts and the continued rate increases in the medical malpractice market,” Pooley added.
IICs by primary class of business Q3 2024
Risk location
When it comes to risk location, the US has consistently been the dominant location of risk insured by Cayman IICs.
Between 2020 and 2024 the proportion of IICs with a risk location of North America has been 89 to 90 percent, and few expect that stat to change significantly in the future. At Q3 2024 Cayman’s 619 North America-based IICs wrote $36.2 billion of premium, or 88.9 percent of total premium. Nevertheless, many in the market are looking into opportunities for more non-US risks to be written in Cayman.
“The traditional source of the insurance risk is predominantly the US, but we are seeing interest and formations from parent companies in Canada, Latin America, and Asia,” Trundle said.
The Cayman government has offices in London and Singapore that promote the jurisdiction, and Trundle added that Latin America and Canada are target markets for Cayman, largely because time difference is not a factor in these situations.
In a more digitally connected world, however, time difference may not be a factor, he said, highlighting that GCM had formed a captive with parent operations in Singapore.
Risk location
Regional risk by premiums
Premium: North America vs All IICs
Bermuda has a far more diverse captive market by risk location, with 421 of its 633 (66.5 percent) captives in 2022 having owners from North America writing gross premiums of $18.9 billion (60.3 percent).
Paul Macey, president of USA Risk, feels that Cayman has to do more to spread the word that the domicile is not just for US clients.
Like Trundle, he has seen opportunities in Latin America, and he thinks there may be ways to tap into the Asian market. However, with European countries showing greater interest in passing captive legislation, he thinks it could limit some opportunities in this region.
“Several of the law firms in Cayman have offices in the Far East which can provide growth opportunities for the insurance sector,” he said.
“The development of European domiciles may curtail the establishment of captives for European companies, and we need to monitor how that is developing.”
Domicile comparison
Compared to its biggest rival domiciles, up to the end of Q3 2024 Vermont has licensed 34 new captives, while Bermuda has nine new captives. Cayman had licensed 19 new captives up to the end of Q3.
While Cayman’s figures compare very favourably against other offshore domiciles, it is more of a challenge competing with popular US onshore domiciles.
“The first question that is always asked when deciding on a domicile is ‘onshore or offshore?’,” Macey said. “In most cases the decision is an easy one to make. Self-procurement rules may dictate that an onshore domicile is better suited.”
Since onshore domiciles are now able to accept ownership structures that were previously only available offshore, Macey said that the playing field has levelled and that domicile selection is becoming more difficult, and that remaining flexible would be key to Cayman’s continued success.
“Cayman will continue to compete as it always has, by offering a solid, politically stable jurisdiction, with sound and appropriate regulation and experienced and knowledgeable on-island service providers,” added Trundle.
“The decision to be onshore versus offshore may come down to the mindset of the owners, so we just need to continue to offer the best product we can, backed up by the glorious waters of the Caribbean Sea and the golden sand of Seven Mile Beach.”
Comparison of captive numbers in leading domiciles
Government support
The vocal support of the government for the insurance sector is another key reason Cayman has been able to remain an attractive captive domicile option over the last five years.
“It has confirmed its intention to remain tax-neutral and to provide the necessary resources to the CIMA for effective industry oversight and to remain agile in supporting captives’ emerging needs and uses,” said Pooley.
Macey added that stability and consistency are some other of Cayman’s biggest selling points over the last few years.
“Cayman has been a leader in developing corporate governance structures to ensure that new insurance entities can meet their obligations,” he said.
“This may appear to an over-reach at times, but clients appreciate the fact that Cayman takes this very seriously and wants clients to understand what they are doing and have an effective management plan in place.”
Growing reinsurance market
Of all IICs in Cayman at Q3 2024, 81.8 percent are captives. This figure had been 83.6 percent in 2020, illustrating the rise in prominence of non-captive IICs in Cayman.
Other stats particularly underline this trend. Across the time period, captives’ share of IIC premium has fallen from 45.4 to 37.6 percent, and share of IIC assets value from 52.6 to 35.2 percent.
Cayman has especially focused on growing its reinsurance sector over the last five years.
The number of reinsurance companies in Cayman has grown year on year, from 58 at the end of 2020 writing $9.3 billion, to 94 writing $25.2 billion at Q3 2024.
Menelik Miller, head of regulatory at Appleby, told Captive Review that there were several reasons Cayman had been able to attract more reinsurers in recent years, one being CIMA’s regulatory framework.
“As Cayman has not pursued the EU Solvency II framework, CIMA is able to accommodate more US National Association of Insurance Commissioners-focused capital models that more closely align with US cedants and their regulatory regimes,” he said.
“The balance between strong regulatory oversight coupled with the efficient use of capital and operational flexibility has made Cayman a compelling jurisdiction of choice for reinsurers.”
Other pull factors include Cayman’s tax-neutral status, proximity to the US, and the jurisdiction’s highly skilled workforce. Trundle added that part of the appeal was Cayman’s lower capital requirements for setting up a new reinsurer, compared to Bermuda.
“There has subsequently been tremendous growth in this segment, and its continued growth should be seen as an opportunity to grow the jurisdiction, rather than a threat to traditional captive insurance,” he added.
Benefit to captives
Miller emphasised that there were many ways captives could benefit from Cayman’s burgeoning reinsurance scene, and that as the reinsurance market has expanded, it has brought in an additional wealth of specialised expertise and resources.
This includes an influx of actuaries, specialist legal advisors, and other professionals, meaning the infrastructure supporting the Cayman insurance industry has become increasingly sophisticated.
Miller said this had made it easier for captives to access top-tier services and expertise locally, reinforcing the attractiveness of Cayman as a domicile of choice.
“Another aspect of this synergy lies in the attraction of institutional investors. The growth in reinsurance has drawn significant capital to the jurisdiction which, in turn, has supported captives by facilitating access to innovative risk transfer solutions and increased financial stability,” Miller added.
“Captives now find it easier to manage complex risks by working with reinsurers that are incorporated in and/or familiar with Cayman, particularly in key sectors such as healthcare and specialty insurance.”
Future growth
Macey predicts there will be continued growth for Cayman’s captive insurance sector, albeit at a slower rate, with increased activity in the reinsurance sector, including “one or two big names in the P&C sector forming reinsurance entities in Cayman”.
He said that Cayman’s insurance industry benefits from the growth of the financial industry in general. However, there may still be challenges the jurisdiction needs to overcome.
“We cannot control the tax laws of other countries, and this will always be a challenge for us,” he said. “If the US imposes changes that make it more difficult for a US company to establish a non-US entity, we will be in a tricky position.”
Macey clarified he does not expect this to happen, but that if it did, there would be little Cayman could do.
It highlights the value to Cayman of looking beyond the US for the location of its risk.
For Trundle, one of the greatest challenges to overcome is anti-offshore sentiment and media reports. While Cayman has fared better than other offshore domiciles in recent years, he thinks that Cayman has to provide unified responses through the Insurance Managers Association of Cayman and other bodies such as Cayman Finance to counter negative messaging.
If it can overcome these challenges there is positivity that the domicile can continue growing even as commercial markets soften in coming years. Then Cayman’s future direction of growth could be much like that of other markets, focusing on emerging risks that are difficult to place in the commercial market.
“More opportunities will develop for traditional captives to insure lines of coverage such as cyber, while industries such as renewable energies and last-mile delivery drivers have shown significant growth and the need to use alternative risk transfer,” Trundle said.
“The industry will continue to go from strength to strength based on the hard work of its dedicated finance professionals, its strong regulatory environment and its ability to adapt. We’re excited to be part of the journey.”
