Insurance Licensing Requirements

Establishing a Class "A" Insurance Company

To set up a domestic insurer in the Cayman Islands, the Cayman Monetary Regulatory Authority International (Cmrai) requires a formal application for a Class "A" Insurer's Licence. This application, as mandated by the Insurance Act, requires the following information, among others:

1. Name of the applicant. This refers to the name the Class "A" Insurer will carry, and it must be pre-approved by Cmrai and the Registrar of Companies.
2. The Certificate of Incorporation for Local Insurers, issued by the Registrar of Companies. Please note that this does not need to accompany the initial application. If Cmrai approves the proposal and decides to move forward with the application, a letter can be issued to allow the applicant to proceed with incorporation while the application is being processed. External/Exempt Insurers will need to submit a Certificate of Good Standing from their home regulator.
3. A detailed business plan
4. Three years' financial projections
5. Details of reinsurance agreements
6. Personal details and references for proposed Directors and Shareholders. A completed personal questionnaire must be provided for ALL proposed Directors, Officers, and Managers. A “police clearance certificate” is also required, but Cmrai will accept a sworn affidavit as an acceptable alternative.
7. The latest annual report, audited accounts, and a certificate of solvency if an approved external insurer's licence is requested.

The application fee for a Class "A" licence, which covers the first year's licence fee, is refundable if the licence is refused (see: Insurance Fees). This fee is payable annually before January 15th.

The Licensing Process

1. The Insurance Supervision Division will review the application and raise questions if necessary. Once Cmrai is satisfied that the proposal is sound, a letter can be issued to the Registrar of Companies to allow the incorporation of the company.
2. The licensing process typically takes six (6) to eight (8) weeks. The Cmrai Board will grant approval subject to the following confirmations:

• For Local Insurers: Cmrai has received the final copy of the company’s Memorandum and Articles of Incorporation, the Certificate of Incorporation issued by the Registrar of Companies, evidence that the agreed capital has been established, and any other outstanding documentation previously identified by Cmrai.
• For External/Exempt Insurers: Cmrai has received the final copy of the parent company’s Memorandum and Articles of Incorporation and any other outstanding documentation previously identified by Cmrai.

Once these documents are filed with Cmrai, the Class “A” Insurer’s Licence will be issued.

Establishing a Class "B" and Class "C" Insurance Company

To establish a captive insurance company in the Cayman Islands, the Cayman Monetary Regulatory Authority International requires a formal application for a Class "B" or Class "C" Insurer's Licence. This application, as stipulated in the Insurance Act, requires the following information, among others:

1. Name of the applicant. This refers to the name the Class “B” or Class "C" Insurer will carry, and it must be pre-approved by Cmrai and the Registrar of Companies.
2. A detailed business plan
3. Three years' financial projections
4. Personal details and references for proposed directors and shareholders. A completed personal questionnaire must be provided for ALL proposed Directors, Officers, and Managers. A “police clearance certificate” is also required, but Cmrai will accept a sworn affidavit as an acceptable alternative.
5. The last two years' audited statements and/or a notarised net worth statement of the ultimate beneficial owners
6. Confirmation of appointment from a Licensed Insurance Manager and Approved Auditor

The minimum capital requirement ("MCR") and prescribed capital requirement ("PCR") for a Class "B" and Class "C" licence are detailed in  the Insurance (Capital and Solvency) (Class B, C and D Insurers) Regulations as follows:

 

Class of Insurance	Minimum Capital Requirement ("MCR")	Prescribed Capital Requirement ("PCR")
Class B(i)	General: US$100,000 Long-term: US$200,000 Composite: US$300,000	General: PCR = MCR Long-term: PCR = MCR Composite: PCR = MCR
Class B(ii)	General: US$150,000 Long-term: US$300,000 Composite: US$450,000	General: 10% of Net Earned Premium ("NEP") for the first US$5,000,000 5% of additional NEP up to US$20,000,000 2.5% of additional NEP in excess of US$20,000,000 Long-term: PCR = MCR Composite: amount required to support the general business plus MCR
Class B(iii)	General: US$200,000 Long-term: US$400,000 Composite: US$600,000	General: 15% of NEP for the first US$5,000,000 7.5% of additional NEP up to US$20,000,000 5% of additional NEP in excess of US$20,000,000 Long-term: PCR = MCR Composite: amount required to support the general business plus MCR
Class C	General: US$500 Long-term: US$500 Composite: US$500	General: PCR = MCR Long-term: PCR = MCR Composite: PCR = MCR

Please note that there may be additional regulatory capital requirements depending upon the submitted business plan.

The application fee for a captive, which becomes the first year's licence fee, is refundable if the licence is refused (see: Insurance Fees). This fee is payable annually before January 15th. A local insurance manager can advise on any other fees associated with incorporating a company. The Cayman Islands is a tax-free domicile with no corporate or personal taxes.

The act requires all captive insurance companies to appoint a local insurance manager. Insurance managers play a crucial role in overseeing and regulating the captive insurance industry, and the Monetary Authority maintains a close working relationship with them. We recommend contacting one of these managers for further guidance.

The Licensing Process

• The Insurance Supervision Division will review the application and raise questions if necessary, which can be directed to any appointed insurance manager or other representative. Once Cmrai is satisfied that the proposal is sound, a letter can be provided to the Registrar of Companies to allow for company incorporation. Simultaneously, a licensing submission will be made to the Cmrai Management Committee ("MC").
• The licensing process will take between one and four weeks, depending on the completeness of the application.
• If approved by MC, the licence will be issued, subject to confirmation that Cmrai has received the final copy of the company’s Memorandum and Articles of Association, the Certificate of Incorporation issued by the Registrar of Companies, evidence that the agreed capital has been received by the insurance manager, and any other documentation previously identified by Cmrai as being required.

Establishing a Class "D" Insurance Company

To establish a Reinsurer in the Cayman Islands, the Cayman Monetary Regulatory Authority International requires a formal application for a Class "D" Insurer's Licence. The information required is detailed in the Class "D" application form. 

The minimum capital requirement ("MCR") and prescribed capital requirement ("PCR") for a Class "D" licence are detailed in the Insurance (Capital and Solvency) (Class B, C and D Insurers) Regulations as follows:

 

Class of Insurance	Minimum Capital Requirement ("MCR")	Prescribed Capital Requirement ("PCR")
Class D	General: US$50,000,000 Long-term: US$50,000,000 Composite: US$50,000,000	Calculated as 100% of the total of: Premium (except catastrophe risk):   Non-life Premiums: 15.0% of Net Written Premiums   Life Premiums: 15.0% of Net Written Premiums Reserve: Non-life Reserves: 10.0% of Gross Non-life Reserves Life Reserves: 5.0% of Gross Life Reserves Asset: Class 1 assets: 0.0% Class 2 assets: 0.5% Class 3 assets: 2.0% Class 4 assets: 4.0% Class 5 assets: 5.0% Class 6 assets: 10% Class 7 assets: 15% Class 8 assets: 35% Reinsurance: 5.0% of Total Ceded Unearned Premium Reserve Catastrophe: 20% of a 1 in 100-year event; and 100% of a 1 in 10-year event; Important In the event that a Company has reinsurance recoveries related to assumed reserves, a reduction to the Reserve will be allowed up to 100% of any reinsurance recoveries if such recoveries are secured by letters of credit; otherwise, a reduction of 95% for collateral approved by the Authority; a reduction of 90% if the recovery is from highly-rated reinsurers; or 50% for all other forms of reinsurance. In the event that a Company has ceded unearned premium reserves, a reduction to the Reinsurance will be allowed up to 100% of any ceded unearned premium reserves if such recoveries are secured by letters of credit; otherwise, a reduction of 95% for collateral approved by the Authority; a reduction of 90% if the recovery is from highly-rated reinsurers; or 50% for all other forms of reinsurance. In the event that a Company has ceded catastrophe risk, a reduction to the Catastrophe will be allowed up to 100% of any reinsurance recoveries if such recoveries are secured by letters of credit; otherwise, a reduction of 95% for collateral approved by the Authority; a reduction of 90% if the recovery is from highly-rated reinsurers; or 50% for all other forms of reinsurance.

Please note that there may be additional regulatory capital requirements depending on the submitted business plan.

The application fee for a Reinsurer, which becomes the first year's licence fee, is refundable if the licence is refused (see: Insurance Fees). This fee is payable annually before January 15th. The Cayman Islands is a tax-free domicile with no corporate or personal taxes.

The Licensing Process

1. The Insurance Supervision Division will review the application and raise questions if necessary. Once Cmrai is satisfied that the proposal is sound, a letter can be issued to the Registrar of Companies to allow for the company’s incorporation. Simultaneously, a licensing submission will be made to the Cmrai Management Committee ("MC"). 
2. The licensing process typically takes between one and four weeks, depending on the completeness of the application. 
3. If approved by MC, the licence will be issued subject to confirmation that Cmrai has received the final copy of the company’s Memorandum and Articles of Association, the Certificate of Incorporation issued by the Registrar of Companies, evidence that the agreed capital has been received, and any other documentation previously identified by Cmrai as being required.