Bermuda lobbying claim over Cayman US insurance status bid

Sources in both jurisdictions have claimed Bermuda has launched a lobbying campaign in an effort to hinder Cayman’s bid to gain US ‘qualified jurisdiction’ status in the insurance business.

A Cayman insurance industry source told the Compass, “This is concerning because we have taken a very different approach. We are trying to stay well clear of poisoning the well for Bermuda, while they seem to have taken the gloves off.”

But he added, “I am not sure at what point that would change for us. Are we going to keep the gloves off and keep it classy, as it were?”

He said he did not want to see Cayman being unfairly “bad-mouthed” in international circles or the media.

The insider added, “I can sort of get it from Bermuda’s point of view, but it’s concerning.”

But he insisted, “Do I think this would derail our efforts to grow the industry? No, not if we do everything right.

“I think the industry in Cayman will go from strength to strength.”

Cayman is looking to achieve “qualified jurisdiction” status from the US National Association of Insurance Commissioners (NAIC), which Bermuda already has.

The endorsement would give Cayman-based insurers and reinsurers the opportunity to have reduced collateral levels under NAIC regulations and make it more attractive as a base for insurance and reinsurance.

A highly-placed Bermuda industry insider confirmed that he had been told the country had taken action to protect its interests.

He said, “I have heard that, but ultimately it is the US people concerned who will make up their own minds.”

Bermuda protecting its interests

The Bermudian source added that industry bodies already worked in the open to promote and protect the jurisdiction’s interests.

He said, “Bermuda is doing what it can to protect the industry, and if the Association of Bermuda Insurers and Reinsurers continues to do what it is doing and it remains at that higher reinsurance level, it will be OK.”

The NAIC is the regulatory body for the insurance regulators in the 50 US states, as well as the District of Columbia and US territories, which include Puerto Rico and the US Virgin Islands.

Bermuda, along with France, Germany, Ireland, Japan, Switzerland and the United Kingdom, has had qualified jurisdiction status since 2015.

Gregg Mitchell, chairman of the Cayman International Reinsurance Companies Association (CIRCA) said any suggestion that Cayman was adapting its regulatory regime to ‘steal’ business from Bermuda was “misguided”.

He added, “CIRCA does not promote the Cayman jurisdiction by comparing it to others, nor do we position ourselves based on perceived advantages over competing jurisdictions.

“Furthermore, we find it difficult to believe that any governing, regulatory, or industry body would act in the manner described—though an individual acting in their own interest may.”

Mitchell agreed with the Bermuda industry source and said it was “important to recognize that the NAIC is composed of professional regulators who follow a defined process. Their decisions will be based on that process, not on external influences”.

He said that CIRCA was not involved in the qualified jurisdiction process, which is being led by the Cayman Islands Monetary Authority (CIMA), but added “we stand ready to assist in any way we are asked”.

The Bermuda Monetary Authority, the equivalent of the Cayman Islands Monetary Authority, and the Bermuda government were asked if they, or agents working on their behalf, had lobbied against Cayman in the US.

Neither replied.

The Cayman office of international law firm Conyers, founded in Bermuda and headquartered there, said in August that achieving qualified jurisdiction status would boost the industry.

A report said, “The possibilities are significant if CIMA and the government can successfully secure qualified jurisdiction status for the jurisdiction.

“Achieving this milestone recognition will bolster our attractiveness and reputation and serve as a stepping stone for an exciting new chapter for the local (re)insurance industry.”

The report added, “Building on a decades long insurance industry, coupled with the ongoing convergence of the reinsurance and investment fund sector, Cayman facilitates the ‘perfect marriage’ of these sectors and, in many respects, this represents the final piece of the puzzle for Cayman in terms of servicing the most sophisticated sectors of the global financial services industry.”