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The Cayman Islands have a story familiar to many in insurance—entering the industry unexpectedly from somewhere else.

In fact, the islands went from sustaining the economy as an exporter of thatch rope to becoming a thriving reinsurance hub in just over 50 years. Now, the islands are seeking qualified jurisdiction status with insurance regulatory authorities in the U.S.

“We have always been a British overseas territory, very small. Everything is imported,” said Honorable Andre Ebanks, Premier of the Cayman Islands. “Back in the day, we only had one export, which is thatch rope.”

This type of rope comes from the fibers of the silver thatch palm—the national tree of the Cayman Islands—and is typically used for the shipping and maritime industry. It’s served as a pillar of the islands’ economy since the 19th century, peaking in 1964 when 1.3 million fathoms of rope were exported, according to The National Gallery of the Cayman Islands.

“We actually did used to export it. But then things like nylon came along, and it died off,” Ebanks said. “Thankfully, we found financial services, and then we found something to supplement the economy. And it’s grown wildly successful ever since.”

Ebanks served as the islands’ Minister for Financial Services and Commerce last term and was elected on April 30 of this year as the Premier of the Cayman Islands. One of his strategic priorities within the current government—The National Coalition for Humanities—is pushing for growth in reinsurance. It’s an aspect of the islands’ economic development that he understands well, as his ties to the islands’ thatch rope and seafaring history run deep.

“My grandfather, great-grandfather, like many Caymanians, would have gone to sea on a ship to be an actual seafarer moving cargo all over the world because that was a job that they could do. And so, they would send money back home,” he said. “They’ve seen all over the world. They tell stories.”

This seafaring history led to a strong maritime authority on the islands, and even now, the Cayman Islands are a leading jurisdiction for superyacht registrations.

“That’s still driving a big part of the economy,” he said. “So, we’re actually now moving in a way that complements our history but that’s still assisting the global economy.”

After the COVID-19 pandemic shutdowns, Ebanks said that like many countries, the islands’ government was thinking about the next economic opportunity. With strong investment funds, banking and private trust client business, three opportunities were identified for a next step: reinsurance, family offices and technology.

“Reinsurance because it dovetails with the highly regulated institutional business that we find in investment funds, and we have found a link between private equity and reinsurance because private equity is about long capital, and that’s pretty much what you need in reinsurance,” he said. “Coupled with our knowledge, our professionals on the ground, our judicial system, our proximity to the U.S.— we’re a one-hour flight to Miami—a culmination of factors just made it really, really attractive. So, once we saw that, we began to say, ‘OK, we need to put some resources behind this.'”

Part of this move is to pursue qualified jurisdiction status with the National Association of Insurance Commissioners in the U.S., which means a non-U.S. jurisdiction has been evaluated to have a supervisory system comparable to U.S. solvency and reinsurance supervision standards. This allows certain reinsurers from that jurisdiction to operate with reduced or eliminated collateral requirements when doing business with U.S. insurers.

“Our job as a government is to give the monetary authority, the main regulator, the resources that it needs to be able to attain that status and also to assist the reinsurance association to appropriately and adequately promote the jurisdiction around the world,” Ebanks said.

He sees this as an opportunity to provide more jobs on the island, further bolstering economic growth as well.

“It provides jobs. It provides educational opportunities. It provides scholarships. It provides charitable donations. So, we see this as something that the local populace can understand,” he said. “It’s because people can say, ‘OK, my son or daughter can get a job.’ They’ve studied to be an actuary. Maybe that job wasn’t necessarily available in Cayman five, six years ago. Now it is. So, rather than their son or daughter having to go to the UK or the U.S., they can do it right here in Cayman.”

“With that sort of breadth and talent, it broadens our financial services product. We couldn’t be more excited about this industry.”

Greg Mitchell, chief actuary at Aureum Re and board chair of CIRCA, or the Cayman Islands Reinsurance Companies Association, sees opportunities for the islands’ reinsurance industry to continue to grow. He said one of the organization’s main priorities is helping the jurisdiction achieve qualified status.

“We are very interested in how we are perceived by U.S. regulators, and we’re working to achieve positive relationships with U.S. regulators,” he said. “And I think qualified jurisdiction status will go a long way there in reputationally solidifying our position.”

CIRCA has 66 members, including insurance managers as well as law, accounting and human resources firms. It has been operating on the Cayman Islands for more than eight years, and in that time has seen substantial growth in the reinsurance market there.

“When we got on islands eight-and-a-half years ago, there were just two or three other reinsurers on islands,” he said. “Now, that’s grown pretty substantially.”

But how did the islands achieve such fast growth?

“Every time there’s a wave of new regulation, what Cayman has done is leaned into it,” Ebanks said. “So, Cayman, if there’s a sort of a secret to our sauce, it’s not ducking regulatory changes.”

Instead, the jurisdiction digs in to find out the concerns, whether they’re regional or international, and how it can help.

“This is no longer a sleepy jurisdiction,” he said. “We are now dealing with a large variety of significant pedigree of institutional businesses who have to comply with regulations all over the world. So, I look at it as if the global tax regulatory landscape is a fence. If you want to participate, and you want to attract good, sound business, then you have to make sure that your part of the fence is just as strong to enhance the global community. Because the fence is only as strong as its weakest link.”

He said going forward, the jurisdiction plans to continue leaning into regulation rather than shying away from it.

“I’d say it’s flexibility within limits. It’s always treading familiar ground,” he said. “I think the biggest opportunity is to obtain qualified jurisdiction status, because that then shows that we are on the same level playing field, have adopted the relevant standards, and regulators can get information from us. It gives the regulators the confidence to know, OK, now they’re on the same level with us. If we need information, they’re willing to work with us. That is our biggest goal going forward to try to capture this market.”

This in Insurance Journal’s sister publication, .

Topics Reinsurance