Insurance (Amendment) Act, 2022 (Act 5 of 2022)

Summary

This Act amends the Insurance Act, 2010 to bring 'capital redemption contracts' (sometimes called 'funding agreements') within the scope of Cayman Islands insurance regulation. A capital redemption contract is defined as an arrangement where an insurer receives and accumulates money and pays out a sum or its equivalent on fixed dates and amounts that do not depend on human life or insured risk (i.e. not a mortality- or risk-contingent product).

• Section 2(1) definition: Adds the definition of 'capital redemption contract' to section 2(1) of the Insurance Act, and expressly states that both 'contract of insurance' and 'contract of reinsurance' include capital redemption contracts.
• Long term business: Amends the definition of 'long term business' so that capital redemption contracts are treated as a form of long term business (new paragraph (d)), alongside existing categories.
• Section 17 (separate accounts): Amends section 17 of the Insurance Act, which governs long term business (separate) accounts, to expressly reference capital redemption contracts, extending the separate-account asset segregation rules (premiums, sums received, and derived interest/earnings) to these contracts.

In effect, this is a technical/legal reclassification: insurers and reinsurers who issue capital redemption contracts (funding agreements) are now subject to the same licensing, classification and long term business account/separate account requirements under the Insurance Act, 2010 as other long term insurance business. There is no new standalone filing or reporting regime created by this short amendment Act itself; it operates by inserting definitions and adjusting existing statutory provisions.

Key obligations

• Insurers and reinsurers must treat capital redemption contracts as contracts of insurance/reinsurance and as long term business under the Insurance Act, 2010.
• Insurers issuing capital redemption contracts must maintain separate account records that include all premiums or sums received for such contracts and all interest, earnings and assets derived from them, as required under amended section 17.

Applies to

insurers, reinsurers, licensees under the Insurance Act, 2010

Related documents

• This document amends Insurance Law, 2010 (Law 32 of 2010)