Captive formation set to increase further in 2021 fuelled by the hardening commercial insurance market and renewed economic growth
The Labuan International Business and Financial Centre (Labuan IBFC) charted a strong captive growth in 2020, with its total number of captives increasing by 15.4%. Overall, Labuan IBFC licensed a quarter of all captives in Asia and MENA.
Labuan IBFC is the only jurisdiction in Asia which provides for the formation of protected cell companies (PCCs) and this has been the largest growth vertical within the self-insurance industry in 2020.
Farah Jaafar-Crossby, CEO of Labuan IBFC Inc, the market development arm of the jurisdiction said “Indeed 2020 was a boon year for Labuan captive business. We had eight new captives formed, totaling 55 captives now licensed by the jurisdiction. This was the highest number of captives formed in both Asia and MENA in 2020,”.
Looking ahead, bolstered by renewed growth of Asian economies, a hardening reinsurance market, the need to cover more esoteric risk like cyber, Jaafar-Crossby expects to see greater awareness of self-insurance vehicles and is expecting 2021’s growth momentum will exceed that enjoyed in 2020.
“In terms of gross written premiums, Labuan’s captive insurance business already accounts for 31.2% of the total gross premiums underwritten in Labuan IBFC amounting to $497.5m, with 65.4% of the total premiums originating from international markets. These numbers clearly indicate a coming of age and maturity of the market, making Labuan IBFC a truly global domicile of choice,” she said.
Roy Sharma, chairman of Labuan International Insurance Association (LIIA), the industry body representing all insurance related licensed entities said “The growth of captives has been in tandem with the increase in our association members as well as ancillary service providers in Labuan. We now have more than 220 insurance and risk management licensee and LIIA plays a pivotal role in Labuan IBFC”.