The provisions in the Insurance Law, 2010, come into effect today [Thursday], according to an order made in Cabinet this week.
The revamped bill was passed in the Legislative Assembly during September 2010.
Cayman Islands Premier McKeeva Bush explained to the Legislative Assembly at the time that the process of re-organising the regulatory framework for insurance had been going on for several years and the latest amendments were based on recommendations from an Insurance Working Group and the International Monetary Fund.
“CIMA is now charged with the obligation to undertake a regular general review of the insurance business in the Cayman Islands, which will ensure that Cayman remains responsive to the needs of the industry in years to come,” said Conyers, Dill and Pearman partner Kevin Butler told the Cayman Islands Journal in 2011. “In addition, CIMA’s scope of supervision and powers of enforcement are clarified and in some cases expanded, enabling CIMA to better serve the public and the industry in the event of an apparent regulatory breach.”
Among other amendments contained in the law is a strengthening of protection for whistle-blowing insurance managers and auditors.
Mr. Bush said that the IMF had advised that changes be made to the legislation to bring it in line with international standards. The premier said most of those standards were being adhered to in practice, but were not set out in law and the amendments sought to rectify this.
He said the aims of the law were to clearly differentiate between the domestic and international insurance markets in Cayman and to regulate each in accordance with its requirements; to strengthen legislation to protect Cayman residents; to bring the law up to international standards; and open new frontiers of business development.
The new law creates two new classes of insurance business. At the moment, Class A refers to domestic insurers and Class B to international captive insurance businesses. The amended law creates new Class C and Class D categories for reinsurers.
“The Cayman Islands has been approached in the past by numerous reinsurers who were seeking to be re-domiciled here but due to the lack of specific legislation pertaining to reinsurance, it was not attractive for them to finalise their move. We know we have the interest of the international re-insurance industry, now we have the legislative framework in place to welcome them,” the premier said at the time.
The amended law also increases protection for domestic policy holders, Mr. Bush said, by requiring class A insurers – domestic insurers – to have Cayman Islands Monetary Authority approval in order to transfer or amalgamate all or part of the insurers’ long-term business. It empowers CIMA to approve or deny requests by the insurer for portfolio transfer and amalgamation.
In the event of a dispute over a domestic insurance contract, domestic licensees must agree to arbitration.