Addressing the media yesterday, Hon. Andre Ebanks, MP, Premier & Minister for Financial Services and Commerce, said the Cayman Islands application to the US National Association of Insurance Commissioners (NAIC) for Qualified Jurisdiction Status (QJS) would be a 16-18 month process, and would allow the jurisdiction to “mature” in the reinsurance space and “potentially grow business.”
Earlier in August, the Cayman Islands submitted its application to the NAIC, a standard-setting body governed by chief insurance regulators from all 50 US states, the District of Columbia, and US territories, for QJS, which would enhance the region’s attractiveness as a global re/insurance hub.
Reinsurance is an area of growth for Cayman’s expanding financial services sector, and with the majority of its reinsurance business originating from the US, obtaining QJS is seen as an important milestone for the jurisdiction as it would bring its reinsurance regulations and legislations in line with the US.
Speaking to the media, Premier Ebanks explained that stakeholders had identified tech and innovation, family offices, and reinsurance as the three main areas of potential growth for the Cayman Islands financial services industry.
“Reinsurance in particular caught my eye because of its natural synergy with investment funds,” said the Premier. “As investment funds, particularly private equity, were beginning to invest in insurance. And the growth was happening organically. It wasn’t part, at that time, of a designed program to be able to promote that business.”
“I think because of the tie-in with private equity, at that point we had over 30,000 funds registered with our Monetary Authority, the overall solid financial services system, our deep bench of financial professionals, our top-notch court system, which has a dedicated financial services division, and just being a lovely place to live and work, seeing that the business was coming organically, and I could see steady growth year on year,” continued Premier Ebanks.
In terms of what impact obtaining QJS would have on the jurisdiction’s reinsurance industry, Premier Ebanks said that he sees the net effect as allowing “the jurisdiction to mature in the space, potentially grow business,” and also move towards the longer-term strategy of “ultimately the reciprocal jurisdiction, should that bear out.”
The Cayman Islands is also a hub for insurance-linked securities (ILS), with specific regulations for ILS structures regulated by the Cayman Islands Monetary Authority (CIMA). In light of this, we asked Premier Ebanks if the move could help to make the island more attractive for ILS arrangements.
“It could. It could,” responded Ebanks. “One of the other reasons that made this area attractive is because it’s complementary to other services. So, whether that be investment funds, whether it be captive insurance, whether it be ILS, although those transactions are directly interlinked at times, it still means that there’s an overall breadth of expertise that’s coming to the country.”
He continued: “A whole ecosystem is coming to the country. And importantly for me, and I’ve already seen this bear out, jobs for young Caymanians who are studying this area, actuarial science. Ordinarily, if there isn’t a decent body of work, those Caymanians will do that work elsewhere… So, growing that level of ecosystem, that professional expertise, and the ability to have other areas expanded and be attracted towards, plus the added benefit of having young Caymanian graduates be able to do those jobs right here at home and not have that brain trust go elsewhere. It’s a very synergistic opportunity.”
At the briefing with media, Premier Ebanks said that there’s no plan B if Cayman failed to obtain QJS, stating that “you go for it all”, while expressing confidence that the jurisdiction’s application would be successful.
