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Captive insurance poised to grow
WELCOME BAHAMAS - NASSAU, CABLE BEACH & PARADISE ISLAND - 2005
Captive insurance poised to grow
Bahamas offers distinct advantages in a growing market
The Bahamas' stable democracy, sub-tropical environment and close proximity to North America (at some points less than 60 miles from Florida) has caught the attention of the captive insurance business.
Clive Dawson of Atlas Insurance Management, an underwriting manager formed as a joint venture with Britannia Consulting Group, explains why captive insurance is better in The Bahamas.
"Captive insurance has developed significantly during the past few years and several thousand (companies) have been formed since they were first developed in the offshore markets.
"Initially used by very large companies they are now also widely used by mid-sized or small companies and, structured properly, can minimize the cost of risk management as they may substantially reduce the cost of administration, claims loss control, expenses, brokerage commissions and other acquisition costs and consulting fees."
They are also used by high-income individuals such as doctors, lawyers and builders to protect against career-ruining legal suits.
Small captive insurance companies may receive tax benefits on the premium income and possibly investment income as well. There are continuing innovations in the sector and captive insurance owners use their captives not only as cost-effective risk transfer tools but also as estate planning options.
Recent amendments to the International Business Companies (IBCs) Act and the passing of the Protected Cell Companies Act have helped establish a modern and positive environment for captive insurance formation and a growing number of investors are making enquiries.
Quick and easy access
The Bahamas' close proximity to the United States and multiple connections to international destinations make it an attractive choice for investors. Captive insurance is, by its nature, a long-term commitment and the large number of international flights to The Bahamas gives it an advantage over jurisdictions which take more time and money to visit. If an investor wishes to participate actively in the management of his or her company, this advantage can override the longer application processing period associated with forming a captive in The Bahamas. Compared with smaller jurisdictions, The Bahamas has strong name recognition and many clients enjoy mixing a short business trip with a weekend of relaxing.
Besides the ease and low cost of getting there, Bahamas advantages include: a relatively large, educated population, a thriving, diverse and international financial community that offers a package of sophisticated financial planning products for high income individuals, excellent internet communications and a mature financial and legal infrastructure.
Low set-up costs
It also has substantially lower government fees for captive insurance companies than Bermuda or the Cayman Islands and this is clearly an advantage when considering where the growth in captives is coming from. With less growth expected from the world's mega-companies, smaller companies are being targeted by a growing number of onshore and offshore jurisdictions. For smaller companies that may be forming a captive for the first time, The Bahamas' lower set-up costs are especially enticing. In addition, the recent Segregated Accounts Company Act lowers the costs and administration involved in the captives market.
"As a dedicated Underwriting manager with licenses in a number of Caribbean countries, we can compare and provide impartial specialist advice on the advantages of each one," says Dawson. "While further work needs to be done in The Bahamas, in particular the speeding up of the application process, it is the first choice for many."
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