Daniel Mah, the Director General of The Labuan International Business and Financial Centre (Labuan IBFC), has praised the rise of captive insurance in the region, stating that Asia in particular shows “tremendous potential” for growth in this area over the coming years.
“Risk management in the form of self-insurance or captives is on the rise, due to it being an overall cost-efficient and customisable risk mitigating tool,” Mah said.
He went on to say that, with four new captives approved in the first six months of 2019, the jurisdiction looks set to continue leading the way in Asia.
A total of 51 captives have been approved in Labuan IBFC as of June 2019, a year-on-year growth of 8.5%.
“In terms of gross written premiums, Labuan’s captive insurance business increased by 12.8% to USD288 million in June 2019, compared with USD255 million of the same period in 2018,” Mah added.
He went on to note how most of these premiums are of Asian origins, particularly from Indonesia and Japan.
In contrast, for the whole of 2018, Labuan IBFC recorded a 11% growth in total gross premiums for its captive insurance business, amounting to $400.5 million.
Farah Jaafar-Crossby CEO of Labuan IBFC Inc, the market development arm of Labuan FSA pointed out that Labuan IBFC being home to one of Asia’s largest reinsurance and retrocession market is also a significant advantage to captive owners.
“Being a licensed insurance related entity in such a large risk management eco-system provides for great access to coverage for these captives,” she said.
“Labuan IBFC is home to more than 200 insurance and risk management licensees and the industry Association, the Labuan International Insurance Association is the single largest industry group in the jurisdiction.”
This represented a significant jump compared with performance in 2017, when gross written premiums increased by just 2.2%.
Labuan IBFC said foreign insurance business accounted for 64.7% of the total premiums underwritten in 2018.
Mah attributed the steady growth momentum of Labuan captives primarily to the growing awareness around its benefits in Asia.
“Captive prospects will always be facilitated by our intermediaries and Labuan FSA for their substance compliance,” Mah concluded.
“As a midshore jurisdiction with adherence to high standards of integrity, transparency and compliance, Labuan IBFC is seen as a substance-enabling and credible jurisdiction that investors can count on.
“We will continue to facilitate business development, ease of conducting business and support market innovation, in particular the captive business to ensure it remains relevant.”