In moving the first reading and committal for the External Insurance Act in the Senate, Sen. The Hon. Dion Foulkes, Minister of Labour & Social Development, pointed out the recent resurgence in interest in The Bahamas as an international insurance centre. He said there are a number of reasons for this:
* The introduction of new insurance legislation incorporating innovative features unique to The Bahamas
* Increasingly restrictive insurance regulation in many onshore jurisdictions
* The high cost of conducting insurance business – both onshore and in some of the other offshore insurance centers
* Changes in onshore tax laws that have impacted some tax advantages of offshore trusts and corporations
* The continuing need for new products for the very substantial Bahamian banking and trust community
Senator Foulkes focused on the implications for captive insurance under the new legislation, noting that the days when captives were the exclusive preserve of multinationals are over. He told his Senate colleagues that there are now over 3,500 captives worldwide with the number growing rapidly. *“The cost of creating them has come down dramatically and The Bahamas is well set up as a jurisdiction to provide the appropriate legal and regulatory infrastructure for captive insurance business.”*
See below for extracts from the Senate Presentation, speaking to:
##Benefits for Captives in The Bahamas##
**The Bahamas’ extensive institutional presence:** The Bahamas is poised to reemerge as an international insurance center. The demand for insurance services is driven by The Bahamas’ extensive institutional presence which already has an extensive network throughout the global financial community which is ultimately the source of this business.
**Geography:** its accessibility from the US and South America. One of the things that makes The Bahamas so potentially attractive for the development and expansion of a captive insurance industry is geography: its accessibility from the US and South America. There is also the perception by the world of The Bahamas not only as a financial centre but also as a prime vacation destination.
**Ease of access to the jurisdiction:** Since captive insurance companies are normally not regulated in any jurisdiction other than the place in which they are organized, insurance policies and negotiations must be seen to be carried out in the country of organization, i.e. The Bahamas. For companies in the western hemisphere, ease of access to the jurisdiction is a real plus.
##Insurance Management Business##
The Senator reported on the potential for alluring smaller companies in the insurance management business, noting that these companies are looking at the cost of company organization and operation relative to other jurisdictions, as well as the presence locally of some level of insurance expertise. Smaller companies can create a lot of business, he said. This is particularly true in the captive insurance industry because it is generally organized by companies or other groups or individuals that have a relationship with one another and are working together to attain more comprehensive, more tax-efficient and less expensive insurance services. *“For The Bahamas, cost and geographic accessibility can really help the jurisdiction develop as a player in the sector.”*
Senator Foulkes also spoke to the potential for creating captive management companies for local securities, brokerage and investment advisory groups, the provision of new outlets for local expertise through banks and trust companies, and the opportunities in the Latin American market. On the last, he said Latin America is one area of great flexibility and growth for captive insurance companies. There, he said, compliance tax planning is beginning to take root in various countries that have begun to enforce and articulate their tax rules and policies. *“With the disappearance of exchange control in most countries in Latin America, circumstances exist for a highly flexible and liberal programme of tax planning in connection with captive insurance,”* he said.
*”I am honored to move this very important piece of legislation”,* he concluded.