Barbados has the reputation - and substantially the reality - of being the natural home of captives with Canadian parents, thanks to long standing tax treaties.
Code of Ethics
Barbados Exempt Insurance Management Association
Members of the Barbados Exempt Insurance Management Association should conduct themselves with the integrity and dignity and act in an ethical manner in their dealings with the public, clients, customers, employers, employees and fellow Association members.
Members of the Barbados Exempt Insurance Management Association should conduct themselves and should encourage others to practise exempt insurance management in a professional and ethical manner that will reflect credit on themselves and the profession.
Exempt insurance managers should act with competence and should strive to maintain and improve their competence and that of others in the profession.
An exempt insurance manager should use proper care and exercise independent professional judgement.
Exempt insurance managers shall comply with all applicable laws, rules, and regulations of any government, governmental agency, and regulatory organisation governing their professional, financial, or business activities.
Exempt insurance managers shall not knowingly participate in, or assist, any acts in violation of any applicable law, rule or regulation of any government, governmental agency, or regulatory organisation governing their professional, financial or business activities.
However, it also has substantially more captives with US parents than Canadian. Another feature of Barbados is that of its current 341 licensed captives, only 208 are active in the sense of writing business on a daily basis.
According to superintendent of insurance, Ian Carrington: "We have a situation where they pay the registration fee but the company does not function actively unless the parent company cannot get the insurance it needs. It is not surprising that this is the case in a soft market. We would naturally expect to see more become active as the market hardens."
Seventeen new Barbados captives were licensed last year, of which five are Canadian, 11 from the US and one from Germany. Canadian owners have been holding off somewhat in the last year as a result of what Christopher Towner, president of the Barbados Exempt Insurance Management Association (BEIMA), describes as "perceived uncertainty about the Canadian tax treaty".
This uncertainty should by now have been resolved. The Barbados Parliament was debating legislation which will allow captives to register as local companies and, therefore, be subject to Barbados taxation but eligible for foreign currency tax credits, thanks to the nature of their income. As a result, exempt insurance companies who want to pay tax for domestic reasons will be able to do so but at a reduced rate.
According to Mr Towner. "This concession has been available for the last 10 to 12 years for certain types of business activity and is now being broadened to include insurance. It is part of the general convergence philosophy between the local and offshore sectors in Barbados."
He points out that over the last three years Barbados has attracted more companies from the US than from Canada without the tax treaty benefits, which showed that Barbados was seen as an attractive, cost effective domicile in competition with Bermuda, the Cayman Islands and Vermont.
Mr Carrington has indicated that there may be a number of legislative changes affecting captive insurance companies during the current year.
There is growing diversity among the island's captives, according to Mr Towner. More captives writing third party business have been formed in the last few years, there are rent-a-captives and some large reinsurance facilities taking advantage of captive legislation in Barbados, including Sun Life of Canada, Gerling Global and Great Western.
The BEIMA is anxious to see that Barbados is one of the domiciles that continues to grow despite the current state of the commercial market and has significantly increased its membership fees to fund increased promotion. It is a co-sponsor of the 1998 International Alternative Insurance Symposium being held in California in March and is co-ordinating promotion of Barbados in Canada through Canadian RIMS.
About four years ago, it adopted a code of ethics as part of a general effort to set and demonstrate professional standards in the industry.