Cayman Islands
Answer ... The Cayman Islands Monetary Authority (CIMA) will not grant a licence under the Insurance Act if the applicant’s insurance group structure hinders effective consolidated supervision. In its Regulatory Policy on Consolidation Supervision, CIMA sets out its requirements for effective consolidated supervision of insurance groups, which include licensees depending on whether CIMA is the ‘host regulator’ (when the licensee is a subsidiary or branch of foreign regulated entity) or the ‘home regulator’ (where the licensee’s group is based in Cayman Islands and the group is not subject to consolidated supervision by another regulator).
As the host regulator, CIMA will verify whether the licensee’s home supervisor conducts consolidated supervision of the entire group in accordance with internationally recognised standards such as:
- the Basel Core Principles;
- the International Association of Insurance Supervisors Core Principles;
- the Core Principles of the International Organisation of Securities Commissions; or
- any other international standard considered appropriate by CIMA.
Specifically, the home country supervisor should:
- receive consolidated financial and prudential information about the group’s global operations; and
- have the capability to prevent affiliations that undermine consolidated supervision and the creation of establishments in particular jurisdictions.
In addition, CIMA will not grant a licence to a branch or subsidiary of a foreign regulated entity unless the home supervisor has confirmed the following:
- There is no objection to the establishment of a branch or subsidiary in the Cayman Islands;
- There are no regulatory concerns for the parent entity or its management; and
- The branch or subsidiary will be included in the consolidated supervision of the parent entity.
As the home regulator of a licensee, CIMA will supervise the licensee as part of the insurance group on a consolidated basis in accordance with international standards, as previously described. CIMA assesses risks posed to the licensee by activities of other group members, taking into account:
- quantitative measures such as financial condition; and
- qualitative measures such as risk management, internal controls and corporate governance.
It may request information or conduct onsite inspections of affiliated entities where necessary.
A licensee that is a member of an insurance group has a general obligation to inform CIMA of any activity or transaction undertaken or proposed by another member of the group that could reasonably be expected to have a material effect on the insurer.