By James Rawcliffe, Sagicor
It is interesting to observe the positions taken by the two leading offshore captive domiciles – the “old world” Bermuda and its keen rival “new world” Cayman Islands when considering the merits or otherwise of Solvency II. There is Bermuda keen to embrace Solvency II equivalency with the veiled hint that Cayman is somewhat recalcitrant in taking its time to consider Solvency II’s relevancy to the captive insurance model. It is understandable that Solvency II features high on Bermuda’s radar given its reinsurance industry and its interaction with the Old World where Solvency II was crafted.
New World Cayman by contrast prefers a wait and see approach to Solvency II. Waiting for what? Could it be to see how Bermuda fares before taking the plunge itself? Or perhaps is it looking to the United States and the National Association of Insurance Companies (“NAIC”) for its regulatory steer? Either way I would view Cayman’s reticence as prudent rather than recalcitrant, seeking anew to provide a viable alternative in the market place, and releasing a long awaited sequel hit in the alternative risk insurance charts to its debut number 1 song back in 1976 “Health Care Captives – War is Over”.
Already Cayman has benefited from the migration of captives from the “old world” due to its wait and see approach. Is it prepared to benefit from a bigger influx once NAIC has played its card in response to the Solvency II lead? Will Cayman twist or stick?
Watch this space….
This blog originally appeared on Captive Review