Howard Byrne, managing director and head of domicile at Aon Cayman, highlights the areas where he is seeing significant growth in Cayman’s captive market
On behalf of Aon Cayman, I would like to welcome all new and returning 2023 Cayman Captive Forum attendees to the island.
Our Forum, the world’s largest captive insurance conference, is particularly special owing to its majority participation of captive owners.
I would also like to thank Aon Cayman’s 100 or so clients, many of whom are attending this year’s Forum, for your continued trust and partnership.
This year has been another very busy and successful growth year for the Cayman Islands’ captive insurance industry.
The Cayman Islands Monetary Authority’s (CIMA) latest captive numbers look likely to exceed all previous records and I would like to thank Kara Ebanks (CIMA’s head of insurance division) and her divisional colleagues for their continued dedication and collaboration in supporting the timely approval of new client licence applications and overseeing the expansion of existing captive business plans, helping our clients respond to ever-changing commercial market pressures in short order.
Aon Cayman has likewise enjoyed another strong business year and I would like to briefly touch on some highlights and updates across our healthcare, general and reinsurance captive portfolios.
Healthcare B(i) captives
Cayman continues to be the leading domicile for US-owned healthcare captives and Aon Cayman is delighted to support this status in establishing three new healthcare captives in the last two years.
While the vast majority of our healthcare captives continue to support their affiliate health systems across traditional hospital professional, physician professional and general liability lines, many have also expanded programmes to support the system’s other operational coverage needs – including workers compensation, property, cyber, employment practices liability insurance, directors’ and officers’, errors and omissions, and medical stop-loss protections – in this tougher commercial market environment.
In 2023, we have helped more healthcare captives launch parental providers stoploss coverages to support continued growth around managed care/value based care initiatives.
These protections, which can represent attractive non-correlating risk for the captive, at the same time provide efficient support to the parent health system in managing the ever-increasing downside risk of government programmes (ie CMS Innovation programmes like ACO Reach) and private health insurance contracts for government and commercial products.
To address another area of healthcare client concern, we’ve supported captive programmes in providing regulatory liability protections to cover actions brought by government entities against the healthcare system.
These liabilities can be in the form of False Claims Act enforcement actions, as well as government actions against the healthcare system related to the Stark Law/Anti-Kickback Statute violations.
Healthcare captive risk management grant programmes continue to be popular.
In 2023, we’ve noted some renewed interest in obtaining risk management grant programme approvals, with particular captive client focus in supporting safe patient handling programmes, patient fall prevention and workplace violence prevention programmes, at the parent level.
Captive programme expansion should only be progressed once proper diligence, discussion, analysis and regulatory approvals (where applicable) have been completed.
Aon Cayman continues to play an important role in this process, supporting our healthcare clients in evaluating options to diversify their captive in order to smooth volatility, provide a more balanced portfolio, and more holistically address existing and emerging risks of the parent entity.
In today’s challenging environment, it is imperative for healthcare entities to look to all available strategic tools to effectively manage their risk, not the least of which is their captive.
General B(i) captives
Our general (non-healthcare) B(i) captive clients are also providing increased support to parent programmes in this challenging market environment.
Many clients have increased retention/deductible support across property, casualty, cyber, professional lines, medical stop-loss, cargo and intellectual property programmes.
Others have used their captive to access competitive facultative reinsurance capacity (which is unavailable on a direct basis) on certain lines.
Reinsurance (P&C) B(iii) licence
Cayman’s proportionate risk-based regulation and solvency requirements, supported by a knowledgeable regulator and experienced service providers, continues to enable cost-effective and capital-efficient reinsurance to largely US-based insurance carriers and programme managers.
Aon Cayman has helped 24 clients license B(iii) reinsurance captive infrastructure in the last five years and continues to be the leading Cayman manager in this space.
Please contact us to learn more about the innovative solutions we have helped develop for our affiliated and third-party writing reinsurance licensees.
Reinsurance (Life Re) B(iii) licence
While Aon Cayman is proud to have helped establish and incubate a number of Cayman’s leading long-term (life) reinsurers ahead of their conversion to Class D licence status, we continue to provide management services to a number of large B(iii) life re and pension risk-transfer reinsurance clients who strategically prefer to maintain a contracted B(iii) licence management model.
We have experienced very strong new interest in this area throughout 2023, as both existing offshore reinsurers and new offshore carrier and private equity entrants move to establish affiliated and/or third-party focused non-Solvency II reinsurance infrastructure.
Aon Cayman brokerage
Cayman’s top brokerage team (10 dedicated insurance broking and advisory professionals) look after the property and casualty (including directors’ and officers’, errors and omissions, and professional indemnity coverages) and health and benefit needs of Cayman’s largest clients.
In a very challenging market, our knowledge, expertise and relationships assure our clients of the most comprehensive coverage at the best possible premiums.
2024
In addition to a number of client licence applications we have under CIMA review, we’re excited to have a strong and disparate new business pipeline in place as we enter 2024.
New opportunities are represented across our healthcare, general, reinsurance (P&C) and reinsurance (life) portfolios and our thanks go out to our numerous partners and promoters both on and off-island for your continued new business support.
We will be growing the Aon Cayman leadership team to manage this continued growth and very much look forward to announcing two strong new leadership hires in early January.
Please do not hesitate to reach out to Howard Byrne to initiate a discussion regarding any of the structures or strategies alluded to in this article: howard.byrne@aon.com
