19 June 2018
The British Virgin Islands (BVI) became a household name on the strength of the International Business Companies Act and recently the BVI Business Companies Act, but it is not just our corporate legislation that is innovative. The 2017 Vistra2020 Report notes “the BVI is ‘an embedded brand’ and still the go-to for most structuring conduits”. Many people are unaware that the BVI offers much more than just an attractive corporate domicile. BVI’s trust legislation offers estate planning solutions for entrepreneurs, in particular Virgin Islands Special Trusts (VISTA trusts) and Private Trust Companies (PTCs). The Securities and Investment Business Act made the BVI an attractive choice for investment funds and managers. In addition to robust corporate and trust legislation, the BVI also has comprehensive captive insurance legislation.
There are misconceptions about captive insurance being only for the largest companies, tax driven and too complex. Captive insurance companies are a form of self-insurance and any organisation with a good risk management programme may benefit from setting up a captive. While it was once part of the risk management strategy of only multinational companies, captives have become a risk management tool used by the middle market as well.
The Insurance Act regulates both domestic and non-domestic business. Life and health business consists of life, annuity, accident and disability and/or health contracts. Everything else is considered as property and casualty business. Statutory amendments in 2015 included new products and services, known as Category E and F Licenses, aimed at creating new opportunities for single parent captives and industry or association captives. Insurance licence fees are based on a tiered licence fee structure, with annual fees based on gross written premiums. This new tiered fee structure was designed so captives with annual gross written premiums within certain thresholds would pay lower annual licence fees, than those captives that wrote a significant book of business during the fiscal year.
Captives are incorporated under the provisions of the BVI Business Companies Act. A minimum of one shareholder is required and there must be two directors who must be individuals. The captive must have a BVI registered agent and a resident insurance manager. The captive sector is supported by experienced professional firms, including legal and accounting practices. Senior personnel have worked in the captive, general insurance and accountancy professions for many years and have professional qualifications, strong technical skills and international client service expertise.
The BVI Financial Services Commission is responsible for the regulation and licensing of financial services, including insurance business. The Insurance Business Division has experience with Asian business. The BVI Government established BVI House Asia in 2013 as part of its commitment to Asia and recently Bank of Asia (BVI) Ltd. has been established.
A.M. Best’s August 2017 Country Risk Tier (CRT) assesses three categories of risk: Economic, Political and Financial System Risk. The BVI is a CRT-2 country, with economic, political and financial system risk assessed as low. This puts the BVI into the same Country Risk Tier as Bermuda, Cayman and Ireland.
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