British Virgin Islands could look to domicile insurance-linked securities

The British Virgin Islands (BVI) could look to become a domicile for insurance-linked securities and catastrophe bonds as a way for it to diversify away from relying on more traditional captive business, according to an article by James McConvill of Appleby Global (a provider of offshore legal and administrative services).

The article, which was originally published in Captive Review magazine, looks at how the British Virgin Islands has become a favoured domicile for captive formation. Captives form the majority of all insurance companies domiciled in the BVI and the jurisdiction is beginning to look at ways it can diversify to remove the dependency on captives and attract different kinds of insurance businesses.

Recently revised legislation from the BVI Financial Services Commission includes a new licensing system for insurers and new corporate governance both of which could open up BVI to new, more sophisticated forms of insurance company. There has also been changes made to the way securities and investments are treated within the BVI which could make it a more attractive domicile.

The article suggests that captives are likely to remain the focus for the BVI, but the islands will be taking a serious look at how they can begin to attract insurance vehicles such as insurance-linked securities in the future.

There’s certanly room in the market for another domicile for catastrophe bond special purpose insurers. The majority of cat bond and ILS SPV’s have been domiciled in the Cayman Islands and Bermuda with a few located in Dublin, Ireland.