PricewaterhouseCoopers spells out the details for those wishing to start and maintain an insurance company in Barbados.
Exempt Insurance Act
Features of the Barbadian Exempt Insurance Act include:
Qualifying insurance companies
A company registered under the Insurance Act may apply for a certificate of qualification if at least 50% of its premiums, and at least 90% of its risks insured, originate outside the Caricom region. Benefits include:
While some level of tax credit will be available if international insurance is carried on, the other tax benefits will not apply where the 90% threshold test is not met.
Establishing an exempt insurance company
Exempt insurance is defined as a business whose risks and premiums originate outside Barbados, and which is owned by persons resident outside of Caricom.
In order to establish an exempt insurance company in Barbados, an application must be submitted to the Supervisor of Insurance. Permission to incorporate an exempt insurance company must first be obtained from the Supervisor, based on a draft application. Once this has been done, the final application is then submitted to the Supervisor with the required information, including:
To ensure the efficient processing of an application, certain steps should be taken. Firstly, the applicant should engage a firm of chartered accountants or attorneys-at-law or an exempt insurance management company in Barbados to prepare the application on the company's behalf and submit it to the Minister of Finance for his approval. The next step is to select and appoint relevant Barbados professional service providers, including an exempt insurance management company (unless the exempt insurance company has in-house management), a firm of auditors, a firm of attorneys-at-law, and bankers. Finally, the applicant should appoint the first directors of the company, including at least one resident citizen of Barbados.
Registering an insurance company
To register under the Insurance Act, a company must submit to the Supervisor of Insurance a completed application containing the same basic information as for an exempt insurance licence, supported by the relevant documents. Where the Supervisor is satisfied that at least 90% of the company's premiums do or will originate outside of the Caricom region, a certificate of qualification will be issued.
The solvency requirements for both exempt and qualifying insurance companies are the same. For general insurance business, the value of assets must exceed liabilities by $125,000 during the first year, and in subsequent years if the annual premium income does not exceed $750,000.
Otherwise, after the first year, the required solvency margin is 20% of annual premium income on the first $5m and 10% thereafter. All calculations are based on the net earned premium of the preceding financial year.
For long-term insurance business, the value of assets must exceed liabilities.