Cayman Islands: Insurance & Reinsurance 2018

1 Regulatory

1.1 Which government bodies/agencies regulate insurance (and reinsurance) companies?

All persons carrying on, or desiring to carry on, insurance business (including reinsurance business) in or from the Cayman Islands need to be licensed under the Cayman Islands Insurance Law. The Cayman Islands Monetary Authority ("Authority") regulates insurance business in the Cayman Islands.

1.2 What are the requirements/procedures for setting up a new insurance (or reinsurance) company?

Insurers are licensed by the Authority as follows:

  1. "Class A insurer" licence, for the carrying on of domestic business (i.e. the provision of insurance in respect of insurable interests of persons ordinarily resident in the Cayman Islands, or of property or vehicles in the Cayman Islands) or limited reinsurance business.
  2. "Class B insurer" licence, for the carrying on of insurance business other than domestic business (however, a Class B insurer may carry on domestic business where such business forms less than five per cent of net premiums written, or where the Authority has otherwise granted prior approval).
  3. "Class C insurer" licence, for the carrying on of insurance business involving the provision of reinsurance arrangements in respect of which the insurance obligations of the Class C insurer are limited in recourse to, and collateralised by, the Class C insurer's funding sources or the proceeds of such funding sources, which includes the issuance of bonds or other instruments, contracts for differences and such other funding mechanisms approved by the Authority.
  4. "Class D insurer" licence, for the carrying on of reinsurance business and such other business as may be approved in respect of any individual licence by the Authority.

The organisational requirements for licensees are as follows:

  1. Only companies incorporated in the Cayman Islands may be licensed as Class A or D insurers and only companies incorporated as "exempted companies" (including segregated portfolio companies) may be licensed as Class B or C insurers.
  2. Directors: Every applicant must have a minimum of two directors who are approved by the Authority.
  3. Physical Presence: Class A and D insurers are required to have a place of business in the Cayman Islands.
  4. Requirement to Appoint a Local Insurance Manager: A Class B insurer or a Class C insurer (unless it permanently maintains a place of business in the Cayman Islands) is required to appoint an insurance manager licensed by the Authority.
  5. Business Plan: Every applicant is required to file a business plan with the Authority.
  6. Capital and Solvency Requirements: Every applicant is required to comply with the prescribed level of capital requirements under the Insurance Law, 2010 (as amended) and the Regulations made under the Law, which differ depending upon the Class of licence sought.
  7. Auditor: Every applicant (unless exempted by the Authority) is required to appoint an auditor approved by the Authority.

1.3 Are foreign insurers able to write business directly or must they write reinsurance of a domestic insurer?

In general, only a foreign insurer licensed as a Class A insurer is able to write domestic insurance business. In certain circumstances, the Attorney General or the Governor in Cabinet may permit an unlicensed foreign insurer to carry on domestic business.

A local insurer is free to contract for reinsurance with a foreign reinsurer (subject to the Authority's consent).

1.4 Are there any legal rules that restrict the parties' freedom of contract by implying extraneous terms into (all or some) contracts of insurance?

There are no statutory provisions that restrict the parties' freedom of contract. However, the Authority needs to approve all insurance contracts entered into by a licensed insurer.

1.5 Are companies permitted to indemnify directors and officers under local company law?

Yes. Cayman Islands companies are not prohibited from indemnifying and exculpating their directors and officers from personal liability for wrongful conduct in the performance of their fiduciary and common law duties.

However, the "irreducible core" of a fiduciary's duty, which has been held to comprise at least the duty to act honestly and in good faith, will remain despite the terms of any indemnity or exculpation provision. Accordingly, such provisions may not operate to indemnify or release a director or officer from liability for conduct which amounts to wilful default, fraud or dishonesty in the carrying out of their fiduciary duties.

1.6 Are there any forms of compulsory insurance?

There are a wide variety of statutory provisions in the Cayman Islands which impose obligations to maintain insurance coverage.

Examples of the sectors and the parties to whom such provisions apply include:

  1. Parties involved in the provision of professional services in the financial services industry such as auditors, attorneys, professional directors, liquidators, insurance brokers, persons licensed to carry on business under the Securities Investment Business Law and persons licensed to carry on business under the Banks and Trust Companies Law.
  2. Employers are required to maintain health insurance on behalf of each employee.
  3. Operators of healthcare facilities are required to maintain malpractice insurance and liability insurance coverage for the facility.
  4. Parties involved in transport operations, including operators of scheduled air services, ships registered in the Cayman Islands and users of port facilities. There are also requirements for road users to insure their vehicles.
  5. Property owners and operators are required to maintain property insurance in certain circumstances.

2 (Re)insurance Claims

2.1 In general terms, is the substantive law relating to insurance more favourable to insurers or insureds?

Cayman Islands statutory insurance law is mainly regulatory in nature and does not generally deal with consumer protection rights.

2.2 Can a third party bring a direct action against an insurer?

Cayman Islands law recognises privity of contract. Accordingly, it is not generally possible for a third party to enforce contractual terms without being a party to the relevant contract.

However, pursuant to the Contracts (Rights of Third Parties) Law, parties to a contract governed by Cayman Islands law may expressly confer on a third party a statutory right of enforcement in respect of any provision or provisions of the contract.

2.3 Can an insured bring a direct action against a reinsurer?

The existence of any such right would depend upon the terms of the contracts between the insured and the insurer, and the insurer and the reinsurer.

2.4 What remedies does an insurer have in cases of either misrepresentation or non-disclosure by the insured?

Pursuant to the Cayman Islands Contracts Law and the common law principles of misrepresentation, where an insurer has entered into a contract of insurance in reliance upon a misrepresentation by the insured, or where there has been non-disclosure of a material fact by the insured which, had it been disclosed, would have led the insurer not to enter into the contract at all, or enter into the contract on different terms, the insurer may have a right to rescind the contract.

Further or alternatively, the insurer may have a claim for damages against the insured where it has suffered loss due to misrepresentation or non-disclosure by the insured.

2.5 Is there a positive duty on an insured to disclose to insurers all matters material to a risk, irrespective of whether the insurer has specifically asked about them?

Contracts of insurance are based upon the principle of utmost good faith. That principle imposes a positive duty on each contracting party to disclose all circumstances material to the risk to the other contracting party.

Accordingly, an insured will generally be under a positive duty to disclose to the insurer all circumstances material to the risk to be insured regardless of whether the insurer has specifically asked about those matters. A circumstance is material for these purposes if it would influence the judgment of a prudent insurer in either fixing the premium or determining whether to insure the risk at all.

Any failure to make such disclosure could provide grounds for the insurer to void the contract.

2.6 Is there an automatic right of subrogation upon payment of an indemnity by the insurer or does an insurer need a separate clause entitling subrogation?

Decisions of the English courts which have confirmed that a right of subrogation exists in respect of all contracts of non-marine insurance which are contracts of indemnity should be followed in the Cayman Islands.

3 Litigation – Overview

3.1 Which courts are appropriate for commercial insurance disputes? Does this depend on the value of the dispute? Is there any right to a hearing before a jury?

Any action for breach of a contract of insurance, including an application for a declaration, where the amount claimed exceeds $1 million, is required to be commenced in the Financial Services Division of the Grand Court. Whilst the Court does have the power, on the application of any party, to order that a civil cause of action be tried before a jury of seven persons, in practice all insurance and other commercial proceedings are heard by a judge alone.

3.2 How long does a commercial case commonly take to bring to court once it has been initiated?

As much of the commercial litigation before the Grand Court is complex, cross-border and involves heavy interlocutory applications, cases can take up to two years to come to trial. However, a relatively simple coverage dispute may take a shorter period of time.

To view the full article, please click here

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions