Business in the Bahamas
Bahamas Insurance Industry Driving Economic Growth Insuring a bright future.
T
he Insurance industry is ranked the third largest industry in The Bahamas and contributes strongly to the nation’s economic expansion. The industry
is divided into two separate sectors; the Domestic Market and The International (Captive) Market. The Bahamas is currently home to over 52 domestic and international insurance companies, making the country second to only Barbados in terms of penetration within the Caribbean basin. The sector, both domestic and international is seeing positive growth. The oldest insurance company in The Bahamas, BAF Financial & Insurance (Bahamas) Limited, part of the BAF Global group of companies, has been providing Health, Life and Investment solutions to residents of The Bahamas for nearly a century and more recently offering local solutions in the Cayman Islands and the Turks and Caicos Islands. Priding themselves on their ability to offer a wide range of solutions in every category, BAF Global has indeed risen from humble beginnings to rank among the top providers across all three categories. Jason Borrino, VP at BAF Global notes: “The Bahamas has a large and professional skill base supporting the local insurance industry. When you find a base of assets in terms of skilled insurance companies and professionals in a well served market, it’s natural that the desire from shareholders for greater value will encourage companies to look outside the domestic market at other opportunities. BAF Global has operating subsidiaries in The Bahamas, Cayman Islands and the Turks and Caicos Islands. As the oldest operating insurance company in The Bahamas, geographic expansion is natural for us. Having spent 90 years building a skilled workforce, reputation and knowledge base, we are actively seeking to export the brand and expertise into other markets.” Furthermore, The Government of The Bahamas has taken steps to bolster its financial services sector through the enhancement of legislation pertinent to inter-
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national products that are in high demand. This is evidenced by the introduction of the External Insurance Act, 2009 (“EIA, 2009”), which came into force on August 19, 2009 followed by its accompanying regulations. With new insurance legislation now in place, The Bahamas is firmly open for business for captive insurance. Currently there are more than 5,000 captives worldwide. Collectively captive insurance companies have net written premium in excess of $50 billion, capital and surplus of more than $100 billion and total invested assets of more than $225 billion. Captives can be domiciled and licensed in a wide number of domiciles including The Bahamas, which serves as a Captive Insurance domicile. Captive insurance companies are formed primarily because of economic reasons, with a focus on risk management and risk financing; there is little to suggest that this sector cannot be re-established as a core element within the Bahamian financial services industry. The establishment of an External Insurance Company in The Bahamas by an onshore entity would result in a reduction of the costs associated with insuring its risks in addition to exemption from taxation in The Bahamas, and well structured asset protection. Jason Borrino sees The Bahamas as a promising jurisdiction for the captive insurance market; “The Bahamas is well positioned to re-emerge as a serious player in the International insurance market. Speaking from experience the Bahamas is a great place to do business and a wonderful place to live and raise a family. In cost terms it competes well with the other more established centres, but has so many advantages in terms of a safe and stable political and legal environment, sensible Immigration policy, home grown insurance expertise and a close proximity to major markets including the US and Latin America.” Leonna International Insurance Brokers Ltd is a relatively recent entity providing
insurance consulting and employee benefits solutions for the corporate world. They provide a wide range of services for an international clientele. Services include captive feasibility and management, employee education, research and performance solutions and administration outsourcing. Jason Borrino said this about the partnership “Leonna International has chosen to use The Bahamas as its home jurisdiction from which to serve a wide international clientele. Leonna International has partnered with BAF Global. Our strategy is to utilise all those people, knowledge and resources grown over 90 years at BAF to support Leonna International in the wider insurance marketplace. It’s a key element of our strategy to use the complementary nature of these two operations to build a local, scalable and deeply resourced business, but to do that with a local context ensuring that we meet our client’s needs from local resources first. It should be a win for all stakeholders; clients get a deeply integrated solution and to some extent a “one-stop shop” of real on the ground expertise and the jurisdiction benefits from further employment and the in-sourcing of value adding activities and the local community become aware of and involved in the International side of the business which benefits the local economy.” The Bahamas certainly does have several strengths that will allow the insurance industry to grow and start competing closely with jurisdictions that have been home to larger insurers for years. With the government focus on building the sector, support from the BFSB and a pro-active private industry, along with the recent passing of favourable legislation there is a mood of excitement in the industry. When long established companies like BAF and new, internationally oriented entities like Leonna International create partnerships and strategic alliances, the market will progress at a rapid rate. n