Global Reinsurance recently conducted a question and answer session with Carlos Belgrave, supervisor of insurance in Barbados.
What are the main criteria for re/insurance company formations in Barbados?
For the domestic insurance industry, different types of business require different levels of capitalisation. They are:
In addition, companies are required to submit a business plan, details of auditors and bankers in Barbados and the name of the company's resident representative, as well as personal information on the shareholders and directors of the company.
The company is also incorporated with the Registrar of Corporate Affairs. Application and licence fees of $250 and $2,500 respectively are required for all companies (both domestic and captives).
When a new re/insurance company is presented for approval, what are the possible negative indicators you are looking for?
These include whether the shareholders and directors are reputable individuals, and whether the resident representative or the MD meets the fit and proper/due diligence test.
Can you provide figures on the numbers of insurance, reinsurance and captive company formations over recent years?
In the domestic industry, there are 16 general insurance and ten life insurance companies.
The most recent figures show that gross premium income for general business in 1988 totalled $111,632,357, and for life business it reached $41,184,518. Barbados' captive/exempt industry has now reached 380 companies, last year, with a gross premium income of $4.2bn.
Which laws govern the formation of international re/insurance operations?
What are the nationalities of the parent businesses that are interested in forming subsidiaries in Barbados?
US, Canada, Europe, and Latin American to a lesser extent.
Which territories do you see as your main competitors and why?
Cayman, Bermuda, Bahamas, British Virgin Islands, Guernsey, Isle of Man, US (Vermont), because of their close proximity to the US and Europe.
Do you see any particular sectors of re/insurance providing growth capabilities for Barbados in the short to medium term?
The introduction of Protective Cell Legislation should attract more business to Barbados.
What are the main attractions of Barbados for new formations?
There are many attractions for business in Barbados. These include the country's infrastructure, excellent climate, stable government, political democracy, easy accessibility, high level of professional services, speed of incorporation and licensing of companies (less than two weeks), no restrictions on insurance business written, simple statutory filing requirements, 30-year guaranteed tax concession and the generally simpler offshore insurance legislation which makes it easier to establish new types of insurance companies.
What is the downside of Barbados for new formations?
Some investors may view the Canadian/Barbados tax issue and OECD's views of Barbados as a deterrent from doing business in Barbados. However, these matters are presently being dealt with and the outcome looks favourable.
How did Barbados fare in the OECD investigation on offshore tax practices, and what is your opinion of the OECD viewpoint?
After an initial meeting in London with the Commonwealth Secretariat and the OECD, a high level consultation was held in Barbados in January 2001, at which three broad principles of transparency, non-discrimination and effective exchange of information were agreed. The agreement of the three principles was seen as a positive first step by Barbados and the other countries in the region towards the de-listing of these countries, but it was recognised that quite a lot more work had to be done to achieve that objective.
There was a second meeting in London from 26 to 28 January 2001, at which concrete proposals as an alternative to the OECD's process were made. These proposals followed on from the meeting in Barbados and sought to develop on the three broad principles, through a multi-lateral forum that was transparent in the development of principles and non-discriminatory in their application. At this meeting, it appeared that there was no common interpretation of the broad principles and the OECD sought to redefine the agreement reached in Barbados. Barbados, along with the non-OECD countries present, proposed a process for defining global standards for the three principles and to develop a work plan to complete the process by December 2005.
Our view of the OECD's initiative is that Barbados does not practice harmful taxation but that Barbados is a competitive tax jurisdiction in which business is conducted within a strong regulatory context and in a business atmosphere that is conducive to the three broad principles described.
What are Barbados' measures to prevent money laundering, and how would you identify it in the re/insurance community? Could you describe Barbados' involvement with the Caribbean Financial Action Task Force?
The Money Laundering (Prevention and Control) Act 1998-38 came into operation on 25 April 2000. Under the Act, a body known as the Anti-Money Laundering Authority (AMLA) was established to supervise financial institutions. A financial institution includes, among others, an insurance company within the meaning of the Insurance Act 1996-32 and an exempt insurance company within the meaning of the Exempt Insurance Act Cap 308A of the Laws of Barbados.
Certain powers and duties of the AMLA have been delegated to the senior officers of the Financial Intelligence Unit. Among other things, the AMLA:
l shall receive the reports issued by financial institutions pursuant to the Act;
l shall, if having considered any report from a financial institution the AMLA has reasonable grounds to believe that the business transaction involves the proceeds of crime, send the report to the Commissioner of Police; and
l may instruct the financial institution to take such steps as may be appropriate to facilitate any investigation by the AMLA.
At the moment, the AMLA is developing anti-money laundering guidelines for the insurance industry which include among other things:
In addition to the Money-Laundering (Prevention and Control) Act, 1998-38, other pieces of legislation enacted with a view to preventing and detecting drug trafficking, money laundering and other serious crimes are:
Barbados is a Member of the Caribbean Financial Action Task Force (CFATF), an organisation of 25 states of the Caribbean basin which have agreed to implement common countermeasures to address the problem of criminal money laundering. It was established as a result of meetings in Aruba in 1990 and in Jamaica in 1992. Its main objective is to achieve effective implementation of and compliance with its recommendations to prevent and control money laundering. The CFATF Secretariat was established as a mechanism to monitor and encourage progress to ensure full implementation of the Kingston Ministerial Declaration through, among others, the following activities:
The principal mechanism for monitoring the implementation of the required anti-money laundering measures is the mutual evaluation programme, which is a core aspect of the work of the CFATF. The programme is designed to give due recognition where the standard benchmarks are met, to identify weaknesses and to make appropriate recommendations with a view to rectification.
Barbados as a member of CFATF is required to comply with the objectives and submit to the mutual evaluation programme; Barbados is due for an evaluation in November 2001. By implementing various pieces of anti-money laundering legislation, Barbados is complying with the requirements of CFATF and assisting with the strengthening the anti-money laundering infrastructure of member states and the provision of information and guidance on matters which are relevant to regional development.
What are your priorities for regulation over the next year?
To ensure that money laundering and insurance fraud are kept out of our domicile. We are working closely with the Anti-Money Laundering Authority and the Caribbean Action Task Force in this regard.
How much are you involved with other insurance regulators around the region and further afield?
Sharing of information with other regulators on a reciprocal basis and meeting at various international conferences, such as the International Association of Insurance Supervisors, the Offshore Group of Insurance Supervisors, the Caribbean Association of Insurance Regulators, the Insurance Association of the Caribbean, US Risk and Insurance Management Society and Canadian, Risk and Insurance Management Society, and the World Captive Forum.
How would you described the relationship between the insurance supervisory department and the business community?
There is a cordial relationship, yet compliance with existing legislation is not compromised.