Captives are licensed by many jurisdictions and the primary jurisdiction of a captive is known as a domicile. Basically, the location where a captive insurance company is formed and regulated is known as the captive domicile. Two types of domiciles are available, on-shore and off-shore. There are many captive insurance domiciles available now but the most popular one is of Bermuda., Cayman Islands, Barbados, Anguilla, to name a few.
One of the most important decisions to make when establishing a captive is choice of domicile. Competition within the captive sector has never been greater, as emerging domiciles compete for market share with the leading domiciles.
While competition is healthy, the range and diversity of potential locations for a captive make this challenging for the customer.
For most organizations’ geographical proximity and ease of travel has made the decision of where to domicile their captive more straightforward.
However, there are a range of factors which should also be given careful consideration when selecting the most appropriate domicile, including:
- Solvency, capitalization and surplus requirements
- Approach, responsiveness and efficiency of the regulator
- Stability of regulatory and business environment
- Legislation: company and insurance law and the availability of cell legislation
- Maturity and quality of local financial services infrastructure
- Availability of high-quality expertise
- Convenience of travel to and from domicile
- Operational costs
- Taxation and accounting requirements
- Compatibility of language, currency and culture
- Convenience of time zone
- Political stability
- Re-domiciliation agreements