Published 29th November 2017, 3:49pm
Thank you, Linda.
On behalf of the Cayman Islands Government, I wish to thank IMAC for always inviting Government to address the knowledgeable, experienced professionals within the local and international captive insurance sector.
Before I go any further, however, I extend to you a special apology from my colleague, Minister of Financial Services the Hon. Tara Rivers. She is in London, as is the Premier, the Hon. Alden McLaughlin, for the UK’s annual Joint Ministerial Council meeting with the Overseas Territories, as well as other meetings. While she cannot be here today, she asked me to convey her unwavering support for Cayman as an international financial centre, and for captives as a key sector; and that this is her message to all persons with whom she will meet while in London.
As you are aware, this forum marks the 25th year that IMAC has hosted this event – and for years if not decades, this has held the honour of being the world’s largest gathering of captive insurance professionals. As a country, Cayman again is honoured to have you here with us.
Moving from strength to strength aptly describes the forward momentum seen in our captives sector. According to our financial services regulator, the Cayman Islands Monetary Authority (CIMA), we already have seen 24 new licences issued for captive insurance companies between 1 January to 30 September 2017. This means that for the second consecutive year, we have eclipsed our 2015 total of 22 new licences.
I particularly note that nearly 10 per cent of this year’s newest entries are PICs– portfolio insurance companies. PICs are available for use by the international insurance market, and this new offering ranks with products from other jurisdictions, including the Delaware Series Limited Liability Company.
Such a significant uptake in PICs is especially pleasing, as Government introduced PICs legislation in 2015 to give the captive sector greater flexibility. This achievement stemmed from CIMA and industry providing input to Government from their respective positions, and this resulted in legislation that is well developed and effective.
I am also happy to report that the majority of our new licences in 2017 – about 75 per cent – are in the class B (i) and B (iii) insurer categories. The use of these classes speaks to the ongoing and successful partnership between Government and CIMA that maintains Cayman’s competitiveness, by ensuring that our jurisdiction’s requirements and insurance fee regime are in line with market rates.
All told, the Cayman Islands continue to be the world’s number one domicile for healthcare captives, with 33% of Cayman’s captives covering healthcare risks. In addition, we are the second largest domicile for captive insurance companies worldwide.
Such success cannot happen without robust regulation, and CIMA is dedicated to providing effective oversight that meets global standards. With this as their objective, and in recognition of the growth of captives, CIMA has requested and received additional funding from Government, which it will use to add resources to monitor the sector.
The provision of captives-specific resources bolsters Cayman’s position as an attractive place for growth and forms part of Government’s framework to provide a compelling business case for captives to domicile here.
Central to this business case is Cayman’s political and fiscal stability and, as Minister of Finance, I am pleased to tell you that Government has a clear fiscal policy for its current 4-year term.
In our 2018 / 2019 Strategic Policy Statement, which outlines Government’s priorities for the next budget period, Government made a commitment to completing a number of important capital projects, including the Owen Roberts International Airport renovations, and constructing a modern cruise pier and cargo dock.
The airport redevelopment already is well underway, with the final phases of construction and the terminal expansion expected to be completed by December 2018. When finished, it will meet increasing visitor air arrivals and form a key part of our five-year National Tourism Plan. While IMAC and Government collaborated to ensure that your arrival in Cayman was smooth, speedy and pleasant, I’m sure that all of our international attendees do appreciate this airport update!
In addition, Government continues to make progress on creating a modern cruise berthing facility and an enlarged cargo port. The redesign of the piers to dramatically reduce dredging and the negative impact on our environment is now finished, complete with preliminary designs and cost estimations. Prequalification of bidders and negotiations with cruise lines are ongoing, as well as the preparation of bid documents.
Statistics and projections in the Strategic Policy Statement also underscore Cayman’s stability.
Moreover, we will continue to enjoy economic growth. Between 2014 and 2016, Cayman’s GDP has grown on average by 2.8% annually, and is expected to continue growing above 2.0% over the next three years.
Because of our political and fiscal stability, Cayman is an attractive jurisdiction for all types of business, including captives, and Government is moving purposefully to ensure that our financial services industry remains strong. Yet, we know our position can be affected by market forces and current affairs, including Brexit.
While at this stage there is no immediate impact on Cayman, we are monitoring Brexit closely and are continuing to engage with the UK. As I mentioned earlier, Minister Rivers and our Premier, Alden McLaughlin, are currently in London discussing a number of matters with UK politicians, including how we can support the UK during and after this process, and Brexit’s potential effects upon Cayman.
In terms of current affairs, I also note that cybersecurity will be discussed during this year’s forum. Cybersecurity is a formidable challenge for all businesses, as evidenced by various news reports. And for IFCs in particular, there’s clearly an ethical difference between exchanging data with jurisdictions through legal mechanisms, as Cayman does, and being hacked. Securing company data is quite obviously a normal and necessary part of any business, and we all have a part to play in protecting the privacy of our clients.
However, the need for legitimate privacy should not be confused with secrecy – as in secrecy surrounding illegal activities. So let me be clear : the Cayman Islands Government does not support or promote secrecy in our financial services industry, and there is no welcome mat here for criminal activity.
Criminals will find no haven on these shores because of our strong legislative and regulatory framework, which is based on British common law; and because of our strong history of adhering to international standards. Moreover, we continuously strengthen our regulations and work hard to maintain strong relationships with international authorities and the jurisdictions with which we exchange tax and beneficial ownership information.
In fact, the Cayman Islands was recently rated largely compliant, yet again, by the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes – a rating shared with the G20’s countries such as Australia, Canada and Germany. I also note that this rating is against the OECD’s recently strengthened terms of reference.
The Global Forum was the first of two assessments for Cayman in 2017 and the second, conducted by the Caribbean Financial Action Task Force, begins this month. The CFATF assessment will evaluate Cayman’s anti-money laundering and countering of terrorist financing measures from a legislative and regulatory standpoint, as well as from an effectiveness in practice, standpoint.
To give you an idea of what our assessors will find, our enhanced AML/CFT framework includes giving CIMA more power to impose administrative fines for noncompliance on entities and individuals.
It also includes an upgrade of our system that further reduces the timeframe in which Government, through legal mechanisms, shares tax and beneficial ownership information with competent authorities in other jurisdictions. This enhanced system is based upon our regime of corporate service providers collecting, verifying, updating and maintaining beneficial ownership information.
But the current affairs update that you are probably waiting to hear about is in relation to the EU. Cayman continues to have discussions with EU officials – as well as UK officials, as the UK is still a part of the European Union – in relation to the EU’s proposed list of non-cooperative tax jurisdictions, which it is expected to announce early next week. Earlier this year the EU contacted more than 90 jurisdictions, including the Cayman Islands, and requested information on their respective tax regimes as part of the process for developing this list.
While we recognise that providing technical input regarding our regime was necessary as part of the EU’s process, we also recognise that the EU’s ultimate decision will be political. That said, Government believes that our positive and proactive engagement will help the EU have a greater understanding of Cayman’s regime and our cooperation with other jurisdictions on tax information matters, as it makes its decision.
Our collective response to all of these matters illustrate Government’s fundamental objective: to ensure that the Cayman Islands remains a top international financial centre on the basis of its strong commercial legislation, and its adherence to global regulatory standards.
In closing, Government continues to further enhance our legislative and regulatory framework to meet both commercial needs and global standards. In doing so, we intend to continue seeking IMAC’s input – on behalf of the captive sector – because you bring to the table important viewpoints on market developments, and the regulatory functions in practice.
In doing so, you greatly support Government’s efforts to ensure that our jurisdiction is competitive and well regulated, in accordance with global standards.
We thank you for this because, as our keynote speaker Mel Robbins is fond of saying, knowing what you need to do to improve your life takes wisdom; pushing yourself to do it takes courage. As a jurisdiction, Cayman has continuously demonstrated collective wisdom and courage to ensure that we remain a leading international financial services centre. So we take her sage words as a call to further action, and as the foundation to further success.
With that, I’d like to invite Mel Robbins to deliver her keynote address.