The Insurance Managers Association of Cayman and the Cayman Islands Monetary Authority review the Cayman Islands' strong growth as a captive domicile in 2002 and say 2003 looks set to continue the trend.

Global market conditions have resulted in an explosion of new interest in establishing captives in the Cayman Islands, but never has the activity been quite as frenzied as in 2002.

For the year ended 31 December 2002, 97 captive insurer licences were issued - more than in any other domicile. Equally as important, the Cayman Islands now has over 600 active licensees transacting insurance business.

Graph 1 details licensing activity over the last nine years and may help to put this growth in perspective.

SPC upsurge
Cayman witnessed tremendous growth in Segregated Portfolio Companies (SPCs) in 2002 - the number of SPCs jumped almost 30% to 53 from 41. More importantly, the increase in the number of active cells was nearly 100%, with 146 new cells added during the year for a total of 302 at year-end. The SPC Law that was introduced in 1998 is now becoming more and more familiar with those in the industry and these types of companies are increasing in popularity.

Activity in 2002 was industry wide, with growth in retail, construction, hospitality, real estate, transportation and healthcare being notable. Medical malpractice was the primary line of business in just over 50% of applications, and workers compensation, general liability and property accounted for 80% of all other submissions.

The medical malpractice crisis generated a number of captive formations for physician groups and healthcare institutions, together with nursing homes and providers of long term care, as they continued to struggle to find commercial coverage, let alone commercial coverage at reasonable terms.

The formation of captives for workers' compensation also continued at a brisk pace, particularly in the manufacturing and construction industries. Although activity in the healthcare sector was greater than usual, the healthcare market in Cayman continues to account for one-third of the overall captive insurance business.

In 2002, the formation of group captives was hampered by the shortage of fronting carriers. However, this did help to fuel considerable growth in existing group captives.

Certainly, 2002 was a remarkable year. But what is in store for 2003? We certainly hope that the traditional markets will begin to show more flexibility and willingness and that others will enter the market to fill the current void of fronting companies. If these had been available in 2002, activity could have been as much as 20% greater.

The year 2003 has started with activity levels as high as those witnessed in 2002. Actual activity through the middle of March 2003 included ten licences issued with over 20 under review. These are either approved in principle, awaiting licensing or in the process of review by the Cayman Islands Monetary Authority.

Cayman continues to be regarded as the domicile of choice for healthcare related captive insurers, but the trends of recent years suggest that all types of captive insurers now consider Cayman to be an attractive domicile option.

Committed to education
The Educational Scholarship Trust Fund of the Cayman Insurance Managers' Association (CIMA) was formed in 1994 to assist with the post high school education of young Caymanians. Contributions are derived from IMAC, the individual insurance management firms and the captive insurance companies themselves. It is the intention that the funds available be used where they can provide most benefit, with preference given to a student studying a business related course.

The first recipient of a scholarship from the fund was Mesha Scott from Cayman Brac. She successfully completed a United World Colleges degree at Atlantic College in Wales. In addition, Dorothy Scott from George Town was the recipient of a scholarship from the fund to Armand Hammer College, New Mexico. She completed her studies and went on to study law at the London School of Economics. The fund has also assisted Bradley Erskine, who studied for a finance degree at Florida International University, and Tuda Murphy, who studied at King College in Tennessee.

Tiffany Anderson of Bodden Town is the current recipient of a full 3-year scholarship awarded by the Educational Scholarship Trust Fund of the Cayman Insurance Managers' Association. The scholarship, worth $75,000, enabled Tiffany to study for a BA (Hons) in Accounting and Finance at South Bank University in London. Tiffany, now in her final year, wishes to become a Certified Accountant once her studies at South Bank University are completed. She is the fourth recipient of a scholarship from the fund.

What is IMAC?
With the formation and recent independence of the Cayman Islands Monetary Authority (CIMA), the Cayman Insurance Managers' Association decided to change its name slightly to avoid any potential confusion over the use of acronyms. Accordingly, in early 2003, the Cayman Insurance Managers' Association became the Insurance Managers' Association of Cayman, or IMAC for short.

IMAC, formerly CIMA, was formed in the early 1980s and has been instrumental in the development of the Cayman Islands' insurance industry.

Major purposes
The association has several major purposes. The primary one is to liaise with the Insurance Supervision Department of the Cayman Islands Monetary Authority and the Cayman Islands government to ensure the continuation of the smooth and effective regulation of Cayman's insurance industry. Additionally, IMAC works closely with the government and other professional bodies to foster and promote Cayman's offshore financial industry. It also participates in the education and professional development of the employees of its member firms.

Cayman's current record growth can be attributed in no small way to the ongoing efforts of IMAC and its member firms to achieve the afore-mentioned goals.

Executive committee
IMAC's executive committee comprises: chairman Mike Gibbs (Kensington); vice chairman Seamus Tivnan (Marsh); secretary Tony Stelling (Aon); treasurer Stephen Gray (Willis); immediate past chairman Tom Clark (HSBC); Stephen Butler (Chandler); Wayne Cowan (JLT); and Nick Leighton (Caledonian).

IMAC is also very proud of its education scholarship fund, The John E Smith Education Foundation, recently named in honour of one of the association's past chairman, who was tragically lost in an aviation accident in 2002.

For information on how to join IMAC, and benefits thereof, please contact any of the executive committee members named above. Contact details can be found on the association web site. For further information on Cayman as a captive domicile, please refer to The Insurance Managers' Association of Cayman web site, , or the Cayman Islands Monetary Authority website, .