Cayman Islands: Insurance Companies

Last Updated: 12 April 2009
Article by Richard Addlestone, Jack Boldarin, James Gaudin, Linda Martin, Andy Randall and John Rogers

Most Read Contributor in Cayman Islands, July 2019


All companies carrying on insurance business in or from within the Cayman Islands must be licensed pursuant to the Insurance Law (as amended), before they can commence business. Furthermore, no company may be registered in the Cayman Islands without either obtaining a licence under the Insurance Law from the Cayman Islands Monetary Authority ("CIMA"), or the consent of the Cayman Islands' Government if any one of the restricted words listed below is included in the name:

  1. Insurance
  2. Re-insurance
  3. Underwriting
  4. Casualty
  5. Guarantee
  6. Indemnity
  7. Surety
  8. Assurance

Application for an insurer's licence is made prior to the incorporation of the company and each application is carefully considered by CIMA to ensure that a high standard is maintained. This firm will be pleased to assist clients in the filing of such an application for a licence.

In the first instance, the application is submitted to CIMA and, if found satisfactory, is approved in principle. Once approval in principle is obtained, the company can be incorporated and the licence will be issued when all outstanding legal requirements have been complied with.

Types of licence

The following types of insurers' licences are available:

Class "A" licence

Class "A" licences are required by those companies specifically wishing to insure domestic risks in the Cayman Islands. We shall be pleased to advise on the requirements for obtaining such a licence upon specific request.

Class "B" licence (restricted or unrestricted)

There are two types of Class "B" licence – an unrestricted licence and a restricted licence. Both types of licence permit the holder to carry on offshore (but not Cayman Islands) insurance and re-insurance business, but a restricted B licensee may only write insurance for its shareholders, members or such other group of persons forming an acceptable mutual association as may be approved by CIMA. Application for a Class "B" licence may be made by an exempted company or an ordinary non-resident company incorporated in the Cayman Islands or a foreign company incorporated elsewhere but registered in the Cayman Islands. It should be noted that CIMA has expressed a preference that exempted companies be used.

In addition, there are provisions for the licensing of insurance underwriters, insurance brokers and agents. Further details of these may be obtained from us on request.

For information on incorporation of companies in the Cayman Islands, reference is made to this firm's Memorandum on Cayman Islands' Companies.

Applying for a licence

In order for an application to be submitted, the following information is required:


The proposed name of the applicant may not be too similar to that of any company carrying on business in the Cayman Islands, or to any major insurance company in any other jurisdiction. Further, the name should so far as possible be indicative of the nature of the Company's business.

Restricted or unrestricted

Whether the licence is to be restricted or unrestricted.


The date on which the applicant intends to commence carrying on business.

Type of business

Whether the business to be transacted is to be general, long term or a combination of both.

"Long term business" is defined as "insurance business involving the making of contracts of insurance:

  1. on human life or contracts to pay annuities on human life but establishing contracts for credit life insurance and term life insurance other than convertible and renewable term life contracts;
  2. against risks of the persons insured sustaining injury as the result of an accident or of an accident of specified class or dying as the result of an accident or of an accident of a specified class or becoming incapacitated in consequence of disease or diseases of a specified class, being contracts that are expressed to be in effect for a period of not less than five years or without limit of time and either not expressed to be terminable by the insurer before the expiration of five years from the taking effect thereof or are expressed to be so terminable before the expiration of that period only in special circumstances therein mentioned;
  3. whether by bonds, endowment certificates or otherwise whereby in return for one or more premiums paid to the insurer a sum or series of sums is to become payable to the person insured in the future, not being contracts falling within paragraphs (a) or (b)."

"General business" is all other business which is not categorised as being long term.

Registered office

Details of the Company's registered office or, if a foreign company, its principal place of business. If a Company does not have its own office, this would normally be the office of the Insurance Manager but, with the approval of CIMA, may be elsewhere.


If the applicant is to depend on agents or a service company for the provision of underwriting, financial or accounting services, full details must be provided together with evidence of such agent or company's willingness to provide these services. It is not necessary to employ the services of any local underwriting management company, and such services can be performed outside the Cayman Islands provided CIMA is satisfied with the credentials of such company. However, an Insurance Manager licensed by CIMA must be appointed.

Principal agent in Cayman Islands

Full details must be provided for the principal agent or representative resident in the Cayman Islands, together with details of the principal office where full business records will be kept. This would probably be the Insurance Manager unless the Company has its own office on the Island. It should be noted that full business records must be kept in the Cayman Islands.

Constitutional documents

A draft of the proposed Memorandum and Articles of Association of the Company. Both the Memorandum and the Articles of Association of insurance companies usually require custom drafting to ensure that each client's needs are fully met.


The names, addresses and nationalities of all shareholders. In the event that any of those persons acts as nominee then full details of this relationship must be disclosed. Further, if the shares are held by a holding company, details of ultimate beneficial ownership must be provided.


A CIMA Personal Questionnaire Form in respect of all directors, managers and officers containing details of date of birth, nationality, qualifications and career, with particular emphasis on their experience in the insurance profession.


The regulations require that three references shall be provided including one from an insurer or re-insurer and one from a bank. The regulations are not specific as to the parties upon whom such references shall be provided as there is a certain amount of flexibility as far as this is concerned. If the principals are private individuals, then these references will have to be provided on the principals themselves together with the directors, officers and managers. In the case of an insurance company being owned by a company in another jurisdiction, copies of such parent's latest financial statements should be submitted with an insurance reference from such company's existing insurers, and personal references on the proposed directors, managers and officers of the local insurance company.


The name, address and professional qualifications of the auditor together with the country whose accounting standards are to apply. In addition, evidence that the auditors have agreed to accept their appointment must be attached. It is normally required that local auditors be appointed, and a list of CIMA approved auditors who have offices in the Cayman Islands follows.

Altschuler, Melvoin & Glasser (Cayman)

Goldstein Golub Kessler International Cayman

Moores Rowland (Cayman Islands)

Arthur F. Bell & Associates (Cayman)

Grant Thornton

Moore Stephens Decosimo Cayman Limited

Baker Tilly Cayman

Harb Levy & Weiland LLP

Morris Cottingham & Co

BBD (Cayman)

J H Cohn (Cayman)

Paul Harris & Company

BDO Tortuga

Kaufman, Rossin & Co. (Cayman)


Berdon Cayman

Kinectic Partners Cayman LLP

Rankin Berkower (Cayman) Ltd

Deloitte & Touche


Rothstein Kass & Company (Cayman)

Doran & Associates (Cayman

Marcum & Kliegman (Cayman)

RSM Cayman Islands

Eisner (Cayman) Ltd

Margolin, Winer & Evens (Cayman)

Untracht Early (Cayman)

Ernst & Young

Marks, Paneth & Shron (Cayman)

Walsh, Jastrem & Browne (Cayman)

Fulvio & Associates (Cayman) Ltd

McGladrey & Pullen, Cayman

Weiser Cayman

Financial year

The date of the financial year end of the Company.

Acceptance of service

The name and address of one or more persons resident in the Cayman Islands who are authorised to accept service of process in legal proceedings on behalf of the company. These would normally be any local directors, but failing there being local directors, would probably be provided by the Insurance Manager or the Registered Office.

Net worth undertaking

Applicants for a Class "B" (unrestricted) licence must provide a written undertaking to comply with the minimum net worth requirements under the law at all times, and must provide evidence to support this undertaking. The net worth requirements are as follows:

  1. in the case of an insurer effecting general business but not long term business, not less than CI$100,000.00 (US$122,000.00);
  2. in the case of an insurer effecting long term business but not general business, not less than CI$200,000.00 (US$244,000.00); and
  3. in the case of an insurer effecting long term business and general business, not less than CI$300,000.00 (US$366,000.00).

"Net worth" is defined as an excess of assets (including any contingent or reserve fund secured to the satisfaction of CIMA) over liabilities other than liabilities to partners or shareholders.

Assets held to satisfy the statutory net worth requirement should preferably be in cash or cash type readily realisable investments.

However, if any part of the funding of the insurer is to be provided in the form of a Letter of Credit, that Letter of Credit should be automatically revolving (ie "evergreen"), or be in force for a period of at least three years. In the event that this is not the case, some other form of security will require to be provided to ensure that the requisite net worth is maintained even if the Letter of Credit is not renewed.

Insofar as restricted licences are concerned, the law does not set out any specific net worth requirements and each application is considered in the light of its business plan. However, CIMA will normally recommend that the business conducted by the company conform to industry practice in regard to the net worth of the company.

Although the current regulations do not specify premium to capital ratios or ratios for individual risk exposure to total capital, it should be noted that CIMA insists that the company's insurance program be structured with a sound capital base. There is no general rule, but the following should be borne in mind:

  1. the premium to capital ratio should normally be between 3 and 5 to 1;
  2. the "industry rule" of each individual risk not exceeding ten percent of the company's capital should be observed, unless there are adequate stop loss provisions;

These ratios are merely guidelines and CIMA is prepared to consider less favourable ratios if they are satisfied as to the essential soundness based on industry experience, or other relevant consideration. The ratios are applied to the retained risk of the company and not to all accepted risks.

Paid in capital need not be deposited in a local bank. However, confirmation of the deposit must be obtained for the licence to be issued.

Loans to related parties made by the insurer will normally be treated as inadmissible assets for the purposes of satisfying net worth requirements. CIMA has requested that any such arrangement should be submitted for prior approval.

Business plan

CIMA will require a three year business plan which should be as comprehensive as possible. From experience, we cannot over-emphasise the importance placed on this document. The business plan should cover the following:

  1. the capitalisation of the company;
  2. the volume of premiums to be written;
  3. the classes of business to be transacted;
  4. whether or not a fronting company is to be used;
  5. the proportion of business to be re-insured;
  6. the nature of the re-insurance programme;
  7. retention of net premiums and maximum liability per risk and catastrophe; and
  8. in the case of a restricted licence the names and addresses of the insureds and their relationship (if any) to the company or its shareholders.

Copies of re-insurance contracts and treaties should accompany the business plan where appropriate.

CIMA has indicated that where a fronting company or a re-insurer is to be involved, they will only give approval to use one having a rating of B-plus or better in Best's Insurance Manual.

Previous applications

If any of the parties connected with the application has ever applied either individually or in conjunction with others for authority to transact insurance business in any other jurisdiction then full details must be given.

Licence fee

The application should be accompanied by the licence fee of CI$7,500.00 (US$9,146.00).

Disclosure of information

CIMA will also wish to know whether they are to be permitted to disclose any information to enquirers and in particular details of the following:

  1. the principals of the insurer;
  2. the management of the insurer;
  3. the total asset position of the insurer from time to time;
  4. the net worth position of the insurer from time to time; and
  5. the type of business conducted by the insurer.

It should be emphasised that such authority to disclose is entirely in the insurer's discretion and refusal to permit such disclosure will not in any way prejudice the outcome of the application.

Annual requirements

Once the licence has been granted and the company incorporated, there are a number of annual requirements as set out below.

Annual licence fee

The annual licence fee of CI$7,500.00 (US$9,146.00) must be paid on or before 15 January each year.

Annual audit

An audit must be carried out under the Generally Accepted Accounting Principles of the approved jurisdiction. The auditors must provide written confirmation that annual statements have been prepared and audited within six months of the financial year end and must also state whether the auditors' certificate was qualified or not. The Law does not state that copies of the statements must be provided to CIMA, but this is normally requested by the Monetary Authority.

Certificate of Compliance

A Certificate of Compliance must be provided by the appointed independent auditor or underwriting manager. This Certificate of Compliance will state the period under consideration and that the company has carried on its insurance business in accordance with the original business plan subject to any other approved changes.

This Certificate will relate only to:

  1. the classes of business conducted by the licensee; and
  2. the particulars described in the application relate to the registered office; agents; the constitutional documents; the Shareholders of the company; and the business plan.

Furthermore if there are any exceptions or qualifications these are to be stated in the Certificate of Compliance.

Government fees

We refer you to the provisions outlined in our Memorandum on Cayman Islands' Companies as to the manner in which Government and CIMA's fees are calculated. The fees quoted below are based on an authorised capital of US$50,000.00.

Fees relating to Class "B" licences

Type of fee

Initial costs (US$)

Annual costs (US$)

CIMA Licence Fees – Class "B"



Government Incorporation fee (minimum) for exempted company with an authorised capital not exceeding US$50,000.00)



Registered office

Walkers Corporate Services Limited will be pleased to provide the registered office, agent for service of process and secretary or assistant secretary of the company. Our fee for this service is US$1800.00 pa (prorated) in respect of each part of a calendar year). Additional administration services would be charged on a time-spent basis. We would liaise closely with the Cayman Islands insurance manager with respect to the administration of the company. The registered office can be provided by the insurance manager but clients should be aware that insurance managers have a statutory reporting duty which might, in some circumstances, conflict with their duties to the company.

Recent developments

Since the adoption of the Insurance Law (2008 Revision) there have been a number of changes to the Law. Please see below.

Tighter regulation for external insurers

Licensed approved external insurers carrying on domestic insurance business are required to maintain upon trust, with a CIMA approved trustee under a CIMA approved trust deed, funds to a specified value (varying as between general business and long term business) in a segregated account at a bank in the Cayman Islands. The terms of such trust deed must provide that the funds are exclusively to be used to discharge the external insurer's domestic business obligations to policy holders and such trusts are not permitted to be made subject to any charge, security interest or other lien without prior CIMA consent.

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.

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