Regulatory Policy - Licensing for Class B Insurers

Summary

This is a CIMA Regulatory Policy (February 2021) that sets out the criteria and process the Cayman Islands Monetary Authority applies when deciding whether to grant a Class B insurer licence under section 4 of the Insurance Act. Class B licences cover insurance or reinsurance business other than domestic business, with three sub-categories (B(i), B(ii), B(iii)) distinguished by the proportion of net written premiums originating from the insurer's 'related business'.

The policy applies to persons and entities applying to carry on insurance/reinsurance business in or from the Cayman Islands as a Class B insurer, including segregated portfolio companies (SPCs), portfolio insurance companies (PICs), and entities seeking reclassification between Class B sub-categories or redomiciliation into the jurisdiction.

Assessment criteria

• Applicant assessment: CIMA assesses fitness and propriety of directors/officers/controllers, the adequacy and content of the business plan, funding and collateral arrangements, track record, transparency, risk management, internal controls, and AML/CFT/sanctions systems.
• Business plan content: Minimum required content includes business strategy, ownership structure, governance, capital plan, reserving/investment/dividend policies, financial projections, service providers, and the reinsurance programme, with additional requirements for Class B(iii) applicants and for those carrying on reinsurance business.
• SPC and PIC guidance: The policy gives specific guidance on how SPCs and PICs should determine which Class B sub-category applies, based on the proportion of premium originating from related business.

Procedural matters

• Application review: Applications go to CIMA's weekly Management Committee.
• Conditional approvals: Conditional approvals must be satisfied within a set timeframe, and licence certificates are issued shortly after conditions are met.
• Reclassification: There are separate procedures and fee-adjustment rules for reclassifying an existing Class B licence.
• Other requirements: The policy also specifies record retention expectations and requirements for redomiciled entities, including audited financial statements.

Key obligations

• Applicants must submit a completed application form with all information required under the Insurance Act and Regulations.
• Applicants must pay the licence application fees prescribed under the Insurance (Applications and Fees) Regulations.
• Where a licence approval is subject to requirements/conditions, the applicant must meet those requirements/conditions within 6 months of the date of approval, or the approval becomes null and void (unless an extension is granted).
• Any changes to information provided in the application prior to licence grant must be disclosed to the Authority immediately, and such changes require Management Committee approval.
• Applicants that are segregated portfolio companies (SPCs) must satisfy the assessment criteria separately for each proposed segregated portfolio.
• Where an applicant outsources management to an Insurance Manager (IM), the IM must be adequately qualified, resourced, fit and proper, and licensed and in good standing with the Authority.
• The business plan must include specified minimum details (business strategy, ownership structure, governance, capital management plan, reserving/investment/dividend policies, financial projections, service providers, and the (re)insurance programme), with additional disclosures for Class B(iii) applicants and reinsurance business.
• Applicants must provide a complete ownership structure chart showing links to ultimate beneficial owners with 10% or more control, including descriptions of intermediary entities and whether they are regulated.
• Applicants must provide details on how and where books and records will be securely stored and remain accessible, per the Authority's Statement of Guidance on record retention.
• Redomiciling applicants must provide up to five years of audited financial statements with their application.
• Entities seeking reclassification of a Class B licence must submit a new completed application, a revised business plan highlighting major changes, documentation for directors/officers, the original licence certificate, and remit any increase in licence fees between categories.

Applies to

Class B insurers, reinsurers, insurance agents, brokers or insurance managers seeking a licence, segregated portfolio companies (SPCs), portfolio insurance companies (PICs), insurance managers (IMs), redomiciling entities applying for a Class B licence

Deadlines

• within 6 months of the date of approval: Applicants whose licence approval is subject to requirements/conditions must satisfy those requirements/conditions within this period, or the approval becomes null and void (extensions may be requested).
• 2-3 business days: Once approval requirements/conditions are met, the Authority will issue the licence certificate within this timeframe.