There are several reasons why Barbados is the ideal choice for your captive insurance business, as Invest Barbados describes

Imagine basking in the allure of tranquil, sun-kissed beaches in Barbados, meeting the friendly people, who are well regarded for their hospitality, and still being able to switch to business mode, exploring the many investment opportunities in the thriving business hub – all on the same island of 166 square miles.

In Barbados, there is no need to choose between business and pleasure. You can enjoy the best of both worlds in this jurisdiction, often referred to as the gem of the Caribbean.

The most easterly of the Caribbean islands, Barbados is located in the North Atlantic Ocean. Renowned for its year-round sunshine, natural beauty and lively culture, the island boasts a captivating history which dates back to its colonisation in 1627, blending British influences with its African roots.

Currently a Parliamentary Republic, the nation ranks high on the United Nations Human Development Index, at 11th in the Americas.

Offering several investment opportunities ranging from financial services, renewable energy, medicinal cannabis, ICT, niche manufacturing, global education and knowledge delivery, medical tourism, research and development, and biotechnology, among others, why wouldn’t you choose to establish your business in Barbados?

In addition to the plethora of investment opportunities, Barbados ranks high on the list as a premier location for establishing a captive insurance company.

Long recognised as a leading jurisdiction for captive insurance, Barbados continues to rank among the top 10 captive insurance domiciles globally.

How did the sector start? In 1983, the captive insurance industry was born with the passing of the Barbados Exempt Insurance Act, and in 1987, four years later, there was a rapid expansion of captives domiciled in Barbados, upholding the nation as a leading jurisdiction for captive insurance.

Over the years, Barbados has attracted captive insurance companies, mainly from Canada, the US, the UK and Latin America, and has witnessed consistent growth with a notable increase in the number of captives choosing Barbados as their domicile of choice, further attesting to its attractiveness as a jurisdiction.

At the end of 2023, Barbados was home to 267 captive insurance companies, the majority of which originate from Canada and the US.

There are several reasons why Barbados is the ideal choice for your captive insurance business.

The country currently has in force 40 double taxation agreements (DTAs) with various countries in North America, Africa and Europe. These tax-efficient treaties reduce operational costs and enhance overall global competitiveness.

The Latin American market is one with which Barbados is actively seeking to expand international business activity, particularly due to Barbados’ incorporated cell company solution, which is attractive to owners of privately-held conglomerates in Latin America. Barbados already has DTAs with Mexico, Panama and Venezuela in force.

The cost of doing business in Barbados is favourable relative to our competitors. For example, engaging our local workforce ensures that long-term relationships can be developed with clients, minimising constant employee churn that results from having to employ a transient foreign workforce. Establishing a captive is relatively cost-effective – the annual licence fee for a class 1 entity is $12,500.

The minimum capital requirement for an insurance company writing all its risk outside Barbados is $125,000.

Companies operating in the captive insurance sector can benefit from flexibility in solvency requirements as follows: • Deferred acquisition costs can be treated as assets; and

• After the company’s first financial year, the required margin of solvency (ie, the excess of assets over liabilities) depends on the level of the company’s premium income for the previous financial year.

Other advantages that make the domicile attractive for insurance business include the following:

• A GAAP accounting system, which is less burdensome than the imposition of requirements to produce local statutory filings;
• Freedom to acquire real estate compared to other jurisdictions that impose restrictions on real estate ownership; and
• Good infrastructure for international insurance companies, including local availability of experienced management companies, banks, investment companies, auditors and lawyers

Insurance companies are categorised into one of three classes as follows:

Class 1 licensee: Company that underwrites related party business, tax rate: 0%

Class 2 licensee: A company that underwrites risk of third parties, tax rate: 2%

Class 3 licensee: Insurance intermediaries, management and holding companies, tax rate: 2%

In addition to the captive insurance sector, Barbados presents several advantages for businesses seeking to establish operations, expand or relocate to Barbados.

Barbados is strategically located offering a favourable time zone, particularly in the North American East Coast, with convenient access to major markets in North America, Latin America and Europe.

Due to its long history of political stability and strong legal system based on English common law, the jurisdiction provides a secure business environment conducive to long-term investment.

With a well-qualified and experienced cadre of professionals, investors will experience a diverse human resources pool in several fields including finance, insurance, law, banking and accounting, to name a few – a key attribute.

Important to business is a stable and robust regulatory environment tailored to support businesses including captive insurance operations. Barbados’ reputation as a transparent domicile speaks to its adherence to global standards as an international financial centre.

As such, the Financial Services Commission (FSC) is responsible for regulating the nation’s insurance sector, which in turn benefits from the FSC’s responsive and efficient management.

The jurisdiction’s recent removal from the OECD’s Financial Action Task Force demonstrates Barbados’ commitment to ensuring sound policies relative to anti-money laundering and counter-terrorism financing.

The global insurance sector can continue in the assurance that conducting business and investing in Barbados is safe.

Barbados provides modern infrastructure including reliable telecommunications, comprising an island-wide fibreoptic network, WiFi and high-speed 4G data services, and a well-connected transport network.

In addition, the country is highly regarded for its quality standard of living, providing a safe and welcoming environment for expatriates and their families, with excellent healthcare and education facilities.

There is no doubt that Barbados offers a compelling value proposition. The jurisdiction has much to offer: strategic location, favourable regulatory framework, cost competitiveness and a cadre of well-qualified professionals, and is supportive of businesses of substance.

Whether you are considering establishing a captive insurance company, expanding your operations or exploring new business opportunities across the range of sectors, Barbados’ welcoming business environment makes it an ideal place to start.