Insurance companies
Captive Insurance in Nevis. In recent years Nevis has become known as
home to a very large number of reinsurance companies, which have been
established there without any licensing requirements. Now, the Nevis Island
Government, as part of an overall policy of ensuring that the jurisdiction
has a regulatory regime and regulatory standards in keeping with
international best practices, has enacted the International Insurance
Ordinance, which came into effect on November 1, 2004.
Anguilla Insurance License
Insurance business is defined in the usual
way as either a long-term business or general business. The long-term
business is issuing annuities, life insurance, or insuring against
accidents.
Belize Insurance Companies. An insurance company can be established in
Belize under the International Insurance Act. This is the legislation that
governs the operation of captive insurance companies, reinsurance companies
and other insurers that have a legitimate need for an international licence.
Antigua Insurance Companies. An internal insurance licence permits an
IBC to engage in any insurance business other than domestic insurance. The
Superintendent of International Insurance Corporations is empowered to
revoke or suspend the licence if its registration is deemed to be
detrimental to public interest. A stated capital of at least US$250,000 must
be maintained at all times. Annual audited accounts must be filed with the
Superintendent of International Insurance Corporations.
Saint Vincent insurance companies. Under the International Insurance
(Amendment and Consolidation) Act, 1998, five classes of insurance companies
are permitted.
Dominica Exempt Insurance Companies Exempt insurance companies can issue a
license in Dominica. A company can obtain a license to provide Management
Services to an exempt insurance company, including accounting, administrative,
brokerage and underwriting services and the processing claims for these type of business.
Offshore insurance companies
Insurance companies of the offshore type belong, together with offshore bank
and trust companies among the most up-to-date tools in the field of tax
planning and tax optimisation. Like offshore banks insurance companies
formed in offshore jurisdictions also enjoy the liberal environment of the
offshore system and legislation.
There exists a number of types of offshore insurance licenses, beginning
with the full international license, through a number of limited licenses to
a license for additional insurance or underwriter or insurance broker
licenses. Every jurisdiction has its own laws and classes of individual
licenses which offer some of the below listed forms of licenses.
- General Unrestricted Offshore License
This is a full international offshore insurance license, which usually does
not have any restriction of activities, which means that on the basis of
this license it is possible to insure, secure insurance or reinsure without
limitation, including providing life policies or policies for other
insurance companies from offshore or onshore jurisdictions.
- Restricted Offshore License
Basically this concerns a full international insurance license which,
however, has specific restrictions, such as an upper limit for the maximum
amount of insurance policies, not providing life policies, foreign exchange
restrictions, etc.
- Restricted In-house License
The Restricted In-house License is a license which enables its holders to
provide insurance services exclusively to a group of natural persons or
legal entities who are the subject matter of the license or to the
proprietor of the insurance company. This type of insurance company is
intensively used by international holdings, banks, insurance companies and
tax optimisation funds. The most frequented seat of these insurance
companies are the Bermuda Islands, where at present about 3,000 internal
insurance companies are registered, which administer insurance policies
amounting to several billions of USD.
- Re-Insurance License
This is a company, which itself cannot insure but which can only accept an
insurance policy and subsequently secure it at another commercial onshore or
offshore insurance company, often at a wholesale price. The home country of
the re-insurance companies is the Caribbean island Nevis, where you can get
a re-insurance company at a price about USD 2,000. A re-insurance company is
an extremely excellent tool for tax planning intended de facto for any
business, consulting or investment company.
Another chapter could be formed by licensed underwriters, brokers or
trustees who can get licenses for international offshore activities in a
number of offshore jurisdictions for international offshore activities at
relatively advantageous conditions.
A major part of the insurance companies of the Offshore type, like ordinary
business offshore companies, are not subject to taxation of their profits,
but they often pay a certain type of lump-sum tax only or appropriate
license fees.
These fees are an important aspect while deciding about the extension of a
license or its cancellation on the part of authorities.
The main characteristics of offshore insurance licenses can be defined as
follows:
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Low interventions on the part of authorities and institutions
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Lower capital requirements than in the case of other jurisdictions
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Tax aspects, they are often exempted from all forms of direct taxes
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Tax on profits are replaced with lump-sum taxes
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Low establishment fees
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Low license fees
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Liberal requirements connected with the operation of the insurance company
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Offshore insurance companies are often not subject to foreign exchange restrictions
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Licenses are easily available in a number of offshore jurisdictions
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In a number of countries no obligation of capital adequacy maintenance
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Possibility of concluding all types of insurance policies, including life policies
Offshore insurance
companies can be used for two basic types of activities:
- for proper insurance, security, reinsurance or other similar activities
- for tax planning purposes
Using an offshore insurance company for insurance activities
Many offshore insurance companies provide their clients with insurance
services which can include various types of insurance coverage of a high
risk - for example against events of negligence and misuse of official
authority, corporate liability, against a possible strike as well as
insurance of other risks which would be very expensive if agreed upon with
ordinary onshore insurance companies. The ability of make profits of
providing these services depends to a significant extent on competition on
the market and on the price of the insurance policy when purchased from
standard providers in an onshore jurisdiction.
Indeed, insurance business activities have become a highly profitable matter
for many private international offshore insurance companies, and it is no
exception that an offshore branch office of an insurance company is more
profitable than its parent onshore company. Since in many cases the onshore
insurers charged an unbelievable premium - or refused to conclude an
insurance policy at all - the parties which were exposed to a high risk did
not have any other possibility but contacting offshore institutions which
were glad to meet their requirements, often even with a discount. Some of
them only contacted the renowned foreign insurance companies which were
willing to take over the coverage of the risks at more acceptable premium
than onshore insurance companies. Other, mostly professional groups,
holdings or individuals with common risks tended to establish co-operation
insurance pools, operating either in offshore locations or in such states as
Vermont (USA) or Colorado(also USA), which had more tolerating insurance
regulations, and which in turn provided insurance to all members of the
interest group.
Use of an offshore insurance company for tax planning purposes
An offshore insurance company may help the international insurance community
not only in the field of tax planning, asset protection, but also for the
purpose of increasing image and goodwill of the group (or holding), which
thus can declare ownership of an insurance company and its capitals
strength.
Who can use an insurance company for tax planning purposes? It is possible
to state that almost anyone whose business activity nature is of such a type
that this legal entity can be made use of. The ownership of an offshore
company brings several basic advantages. The first advantage is a simple
fact that this company provides a certain type of insurance at all.
Conservative insurers continue to consider many companies and transactions
to be too risky and they simply refuse to provide a standard insurance, or
if one manages to persuade them to make an insurance policy quotation, they
require such restrictive conditions that it is virtually impossible to
conclude it. That is why a company which needs to conclude an
non-conventional insurance policy before starting a new project can get into
a situation that it will have to leave its plans due to the impossibility of
finding an insurance (reinsurance) coverage. But an insurance policy
provided by an International Captive Insurance Company, for which it is
possible to find reinsurance more easily on the part of a conventional
re-insurer, can solve similar problems for many firms. In comparison with
costs of coverage provided by domestic insurers, the insurance premium rate
at the international institution will probably be much lower.
Second, there are also tax advantages resulting from the insurance at an
international insurance institution, because the costs charged by an
insurance company formed in this manner can be included into the tax base of
the company. In other words this means that all insurance contracts and
policies concluded, for which an insurance company logically requires
remuneration, can reduce the tax base of the parent company of the investor
in an invoiced volume.
Offshore insurance company can conclude coverage for:
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Risks connected with foreign activities
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Export, import and all foreign activities
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Insurance of persons in foreign countries (for example on business trips)
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Insurance against loss from business risks
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Risks connected with loans, guarantees, purchase of securities
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Risks connected with professional liability
Offshore insurance companies are uniquely one of the most up-to-date tools of offshore strategies. Their use reaches from the providing of proper insurance companies for the general public to family insurance services which optimises tax burden of a very rich individual or to the service of cash flow active management at international firms.
If you have questions about setting up offshore captive insurance company please contact us.
