What is a Captive Insurance Company?
A captive insurance company is a company whose charter permits it to offer
insurance to its parent or sister subsidiaries in return for premiums.
Usually, this company is located offshore for tax reasons.
Why Start One?
In almost every case, captives are started because of a general
dissatisfaction with existing insurance coverage or costs. The advantages
are in these areas: Insurance, Commercial, Financial, and Tax.
A Captive Insurance Company in Curaçao
On December 17, 1990, the Insurance Supervision Act came into effect in
Curaçao . This Act regulates the supervision of the insurance industry in
Curaçao . Based on this Act and considering the specific needs, captive
insurance companies and reinsurance companies are regulated by separate
decree. The supervision is entrusted to the Central Bank of Curaçao and St.
Maarten.
Licensing
Conducting international insurance activities from Curaçao is, since this
Act, no longer possible without a license issued by the Central Bank of
Curaçao and St. Maarten.
In order to qualify for the license and for the Central Bank to assess the
viability of the future operations, the company must submit financial and
technical insurance information together with its formal application to the
Central Bank.
According to the stipulations, the company will have to be incorporated in
Curaçao . However, the Central Bank is authorized to grant exemption of this
stipulation and to license companies incorporated and domiciled in other
countries, to open up branch offices in Curaçao . The Act stipulates that
the company can only carry out either life or general business. The Central
Bank has the authority to grant exemption from this provision.
Capital Requirements
There are no special provisions with respect to the capitalization of new
insurance companies. The amount of initial capital will be determined by the
amount of money needed to start up operations according to the business plan
and the minimum solvency margin applicable.
Solvency Margins
Internationally operating insurers shall maintain a solvency margin, which
is calculated taking into consideration the total reinsurance coverage. The
margins are as follows:
- Life insurance: 4% of the technical provisions at the end of the previous financial year after deduction of the reinsurance share in this provision, but amounts to not less than US $225,000.
- Non-life insurance: 15% of the premium income of the previous financial year, after deduction of the premiums for reinsurance ceded in that year, but amounts to not less than US $170,000.
- Reinsurance: 10% of the premium income of the previous financial year, after deduction of the premiums ceded in retrocession in that year, but amounts to not less than US $557,000.
Captive Insurance
One of the hottest topic in board rooms today is whether or not to climb
onto the captive insurance bandwagon, or if they are already participating,
whether they should really venture into underwriting.
Captives now number over 10,000. Many of these captives are located in
Bermuda, Bahamas, British Virgin Islands, Cayman Islands, Guernsey, and
Curaçao . Of the U.S. Fortune 500 companies, over half have captives.
Contact PMP (Curaçao) N.V.
If you are interested in establishing a Curaçao captive insurance company,
or would like further information, please contact our offices via email
(info@pmpgroup.biz) or call us at (+599) 9 737 0754.
Disclaimer:
The information contained in this memorandum is of a general nature only and
should not be construed as legal or tax advice. Readers should obtain
appropriate professional advice before setting up any structure. If
required, PMP can refer readers to a panel of reputable tax- and legal
advisory firms.
Captive Insurance