According to Peter W. Bates, the supervisor of insurance, following the experience gained in recent years, some relatively minor amendments to The Insurance Act 1994 are anticipated later this year.
BVI captives are required to submit independently audited financial statements annually, and those companies licensed to conduct long term insurance business are required to submit an actuarial valuation of assets and liabilities annually, certified by an approved actuary. "All shareholders are required to sign a declaration agreeing to give the insurance regulator whatever information may be required in connection with a captive at any time," explains Mr Bates.
Captives in the domicile are not subject to any form of taxation.
At the end of 1997, 142 captives were licensed, 23 of which were incorporated during that year. Breaking the roll-call down, 52 are single parent, 20 group and 70 credit.
"The single parent and group captives come from a wide range of applicants, including manufacturers, distributors, construction, professional, medical, etc," remarks Mr Bates. "The trend appears to be towards small to medium sized companies paying premiums of three or four thousand dollars or more annually, with low risk exposures and good loss records who can cut costs by self insuring and reinsuring risks previously insured directly with the commercial markets. Most of our applications emanate from North America, but we do have licensees in Europe, Scandinavia and South America. We foresee opportunities for growth in South America and Asia."
In terms of the BVI's infrastructure, there are eight licensed insurance managers, five of the six big accountants, various legal firms and trust companies and first class banking facilities. "Our infrastructure is good," contends Mr Bates, "but there is certainly room for expansion, particularly as over the past few years we have experienced sustained growth in the financial services sector."
Asked about competitors, Mr Bates has the following to say: "Financial services is not the type of business in which one competes in the usual sense of the word. Of course we want to attract business to the British Virgin Islands, but only that type of business which meets our own criteria. Therefore, our major marketing tool is our reputation which we take very great care to guard and maintain. The quality of financial services legislation and regulation is extremely important to us and our clients."
Just last year, the Proceeds of Criminal Conduct Bill, 1997 was passed, going beyond any existing anti-crime legislation and expanding the scope of anti-money laundering legislation to cover the proceeds of all serious crime in the BVI. As The Honourable Ralph T. O'Neal, British Virgin Islands Chief Minister and Minister of Finance, stated in his speech to the Legislature: "Passage of this all important bill will demonstrate to the outside world that the BVI is at the forefront of jurisdictions committed to firm and effective action to protect the integrity of their finance industries. It will ensure that the BVI's financial activities remain internationally competitive and will continue to attract and retain only high quality, legitimate business."
Mr Bates goes on to point out that the stability of the jurisdiction is also important. "We see ourselves as a value added service industry, rather than a bureaucratic arm of government, and so we strive to give the best possible service to our clients on a cost effective basis."
Looking to the future, Mr Bates expects to see more interest being taken in the domicile by large insurance broking and management companies, which, together with the business generated by existing insurance managers, will result in a steady increase in the number of companies incorporated and licensed to transact all types of traditional and non-traditional insurance business from the BVI.
He concludes: "The financial services industry worldwide is undergoing major legislative changes, coupled with a restructuring of all segments of the industry aimed at one-stop shopping for financial products. The enactment of various pieces of finance related legislation over the past two years puts the British Virgin Islands well on its way to becoming a well respected one-stop domicile for financial services."