Statement of Guidance - Licensing - Insurance Companies

Summary

This is a CIMA Statement of Guidance setting out the criteria the Cayman Islands Monetary Authority applies when licensing insurance companies, and the ongoing standards licensed insurers are expected to meet. It covers fit and proper requirements for directors and management, minimum board composition, capital adequacy, internal systems and controls, record-keeping, anti-money laundering compliance, industry standards, business plan and track record expectations, audited financial statements, and consolidated supervision requirements for branches or subsidiaries of overseas financial institutions.

The guidance applies to applicants for and holders of insurance licences in the Cayman Islands, distinguishing in places between Class 'A' (domestic) and Class 'B' (international/captive-type) insurers. It is intended to guide both prospective applicants preparing licence applications and existing licensees in maintaining compliance with CIMA's expectations.

• Fit and proper: Demonstrating that controllers and managers are fit and proper.
• Board composition: Maintaining at least two executive directors, except for approved external insurance companies.
• Changes in personnel: Obtaining CIMA approval for changes in directors, officers, or managers.
• Capital adequacy: Meeting minimum capital requirements under applicable insurance legislation.
• Internal controls: Maintaining compliance manuals and internal controls.
• Record-keeping: Keeping specified books and records, with Authority approval needed to keep records overseas.
• Anti-money laundering: Complying with money laundering regulations.
• Business plan: Submitting a detailed three-year business plan, with additional disclosures required for Class A and Class B applicants.
• Audited accounts: Having accounts audited annually by an Authority-approved auditor.
• Consolidated supervision: For Class A companies linked to overseas financial institutions, providing evidence of consolidated supervision and good standing from the home supervisor.

Note that the document references the 'Money Laundering Regulations, 2000,' which have since been superseded by later AML/CFT regulations, suggesting this guidance may not reflect the current regulatory framework in all respects.

Key obligations

• Applicants must demonstrate that persons controlling and managing the entity are fit and proper (honesty/integrity, competence/capability, financial soundness).
• Maintain a minimum of two executive directors, except for approved external insurance companies.
• Obtain the Authority's approval for any change in directors, officers or managers.
• Commence and maintain operations with the minimum level of capital required under applicable insurance legislation, and provide additional capital if required by the Authority.
• Class 'A' applicants must provide details of the deposit/letter of credit supporting Liabilities Support provisions.
• Maintain financial resources adequate for the nature and scale of the business, whether actual or contingent.
• Maintain compliance and procedural manuals and internal controls to ensure effective management and legal compliance.
• Maintain timely and accurate management information supported by full and accessible records, and obtain Authority approval before locating records overseas.
• Maintain specified books and records, including a policy register, current insurance policies, statutory records, other agreements, and service provider records.
• Comply with the Money Laundering Regulations (Know Your Customer requirements).
• Comply with applicable industry standards where they exist.
• Prepare and submit a detailed three-year business plan, notifying the Authority of any changes to it.
• Class 'A' applicants must provide additional business plan details (dividend/investment policy, actuarial services, reinsurance structure, business continuity plan, due diligence procedures, outsourcing arrangements, policy form copies).
• Class 'B' companies must provide additional applicable details (fronting company and rating, investment policy, reinsurance structure, retention/cession levels, loss history, outsourcing arrangements, etc.).
• Have accounts audited annually by an auditor approved by the Authority.
• Class 'A' insurers that are branches or subsidiaries of overseas financial institutions must provide parent supervisory authority approval and assurance of consolidated supervision and good standing, where appropriate.

Applies to

insurance companies, Class 'A' insurers, Class 'B' insurers, approved external insurance companies, insurance company management companies