During a recent media briefing, Hon. Andre Ebanks, MP, Premier & Minister for Financial Services and Commerce, highlighted how the Cayman Islands’ application for US National Association of Insurance Commissioners (NAIC) Qualified Jurisdiction Status (QJS) could further boost the territory’s appeal for ILS, while also creating opportunity for the island to mature in the reinsurance space.
As our sister publication Reinsurance News reported, the Cayman Islands recently submitted an application to the US National Association of Insurance Commissioners (NAIC) for Qualified Jurisdiction Status (QJS).
Reinsurance is a major area of growth for Cayman’s expanding financial services sector and given that the majority of its reinsurance business activities originates from the United States.
Therefore, obtaining Qualified Jurisdiction Status is seen as an important milestone for the jurisdiction as it would help bring the territory’s reinsurance regulations and legislations in line with the US.
It’s important to remember that 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).
Given this, we asked Premier Ebanks whether this initiative could potentially enhance the island’s appeal for ILS arrangements.
“It could. So, go back to the vision of last term that I indicated and expressed, and I’ll maybe utilize your question to expand. 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,” Ebanks explained.
Ebanks also explained how the QJS will also enhance the territory’s ecosystem, therefore creating more job opportunities, some of which could be within the ILS space.
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, to be able to see them graduate and really have some of those examples that I’ve already heard on islands, and again, this is not pie-in-the-sky stuff, who actually come home and say, I’ve gotten a job at a CIMA licensee that’s in reinsurance because the job is now available in Cayman.”
“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,” Ebanks added.
In addition, Premier Ebanks also explained to the media 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. 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.”
He continued: “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.”
And lastly, whilst addressing what kind of impact obtaining QJS could have on the jurisdiction’s reinsurance industry, Premier Ebanks noted 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.”
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