By Marlon Madden

Officials of the global business community are warning regulators that new corporate governance guidelines could put significant pressure on micro captive insurance companies, making the jurisdiction unattractive for them to domicile.
President of the Barbados International Business Association (BIBA) Jamar Arthur-Selman raised the issue on Thursday.
He said while he was thankful that Barbados remained a jurisdiction of choice, with “typically very good regulation” and oversight from the FSC, he was concerned that across-the-board requirements for the captive insurance industry could inadvertently put too much pressure on smaller firms.
“We at BIBA remain ever vigilant to the concerns of our members and therefore, while congratulating the FSC on the recent issuance of its new corporate governance guidelines, we are also open to dialogue with them regarding the significant burden that these guidelines could place on some small captives and wholly-owned subsidiaries of non-parents.”
But in an immediate response, Chief Executive Officer of the Financial Services Commission (FSC) Warrick Ward gave the assurance that he was prepared to review the guidelines to ensure they struck a balance.
Ward promised that as the regulator, the FSC would continue to work closely with industry officials to ensure that strong regulation and compliance were maintained but not at the cost of businesses.
“It is a fine balance that we have to take. We still need to have strong regulation so that we don’t get knocked on our knuckles by the international bodies, but we also need to have it fit-for-purpose for the type of market that we have here while still not putting the ultimate beneficiaries or those who participate in the business at peril,” he said.
“We will look at this, we will take all comments on board and we will come up with something that is reasonable. There may be some compromise on both sides. That is how we look at it,” said Ward.
Arthur-Selman told a press event on Thursday: “So far, we are heartened that the FSC has been open to listening to our concerns and we look forward to reaching an amicable solution to the issue in the interest of keeping our captive insurance industry on its growth trajectory,” he added.
A captive insurer is generally defined as an insurance company that is wholly owned and controlled by its insured – the parent company or group.
Arthur-Selman explained that “Really what transpires in the FSC is that it is doing such a good job that it may put a little pressure on either smaller captives who may not necessarily need to put in place all of what is being asked.”
Adding that the structure of the micro captive insurance firms was not as complex as the group captives, he said it may not make sense for them to be subjected to the same set of rules.
At the start of this year, the FSC released new evidence-based corporate governance principles, which it said were founded on international best practices to enhance trust, transparency and accountability.
Chairman of the BIBA Insurance Committee Ricardo Knight said he believed the corporate governance rules “seemed to have contemplated large commercial reinsurers” more so than the pure captives, as he indicated that a one-size-fits-all approach was not ideal.
He explained that current rules of corporate governance seemed to be more suited for group captives that would have in place several different committees “that you would expect a large organisation that is servicing third parties and the general public to have”.
He suggested that the FSC instead take a different approach where it sees micro captives “as lower risk”.
They made the observation during a press launch of the third annual Barbados Risk and Insurance Management (BRIM) conference at the FSC’s corporate office in Bay Street on Thursday.
The conference, which is slated for March 23 and 24 at the Hilton Barbados Resort and will also be accessible online, is expected to attract a range of insurance, reinsurance, risk, banking and accounting professionals from around the world.
Arthur-Selman said he was hoping that the conference would form part of the strategy to keep Barbados “top-of-mind across the world”.
As of December 2022, the FSC had on record some 187 class one insurance companies, which include captives, with an estimated BDS$54.1 billion in assets.
Noting that he was aware that larger domiciles were keeping a close eye on Barbados, Arthur-Selman said “They are looking for chinks in our armour and actively executing strategies such as the passage of the Captive Insurance Act passed in Alberta, Canada last year to convince their captives to redomicile at home.”
[email protected]

Read our ePaper. Fast. Factual. Free.

Sign up and stay up to date with Barbados’ FREE latest news.

Source link

Tags: No tags

Add a Comment

Your email address will not be published. Required fields are marked *