The Cayman Islands’ captive
insurance industry has reported a record high of $13.5 billion in total
premiums and $82.8 billion in total assets as at 30 June 2013, official figures
show. The figures represent a year-on-year rise of 52 per cent and five per
cent respectively.

A captive insurance company – or “captive” - is an insurance
subsidiary set up by a parent company to underwrite the insurance needs of the
other subsidiaries. An example is that of UK-listed British Petroleum, which
created a “captive” to provide environmental insurance to its operating units.
Money from this captive was spent to fund the big costs of the Gulf of Mexico oil spill (source: Forbes).

“2012 was considered a year of phenomenal growth for Cayman
captives with 20 new licenses granted in the first two quarters (53 for the
whole year), and over the same period this year, we have attracted 24 new
captives.  This is very encouraging and
demonstrates the fact that Cayman continues to attract solid business because
of its high level of transparency and regard for international regulatory
initiatives and its history of integrity,”Rob Leadbetter, chairman of the
Insurance Managers Association of Cayman, said in a statement produced by the Cayman Islands Monetary Authority. 

Most of the captives are from North American-based
companies, with 34 per cent of them relating to medical malpractice and 21 per
cent covering workers’ compensation, according to the CIMA.