The Bahamas must "get on its soap box" and promote itself as "open for business" if it is to begin catching up with regional leaders Bermuda and the Cayman Islands in the captive insurance sector.
Director of Chandler Gilbert Insurance Associates Ltd. Guilden Gilbert said he sees a niche for The Bahamas if it "differentiates" itself from other offshore captives markets, promoting this nation as a price-competitive domicile for "mom and pop" captive insurance management companies in the $250 to $500 million range.
Gilbert was commenting on the significance of two proposed legislative amendments advanced in the House of Assembly yesterday by Minister of Finance Services Ryan Pinder.
Speaking in Parliament on Monday, Pinder touted the International Business Companies (Amendment) Act and the Segregated Accounts Companies Amendment Act as set to bring technical amendments that will make The Bahamas "more marketable" as a captive insurance destination.
However, Gilbert said he sees promotion as even more critical than these technical amendments.
"We could talk about it all day, but a prospective manager is more interested in knowing the industry has 100 percent of the support of the government. I believe Ryan Pinder is now stepping up to the plate and making the necessary statements," stated Gilbert, who described Pinder as "driven" on the subject of growing The Bahamas' captives industry.
"My recommendation is never to try to compete head on with Bermuda or Cayman. That's a very difficult battle to win. The Bermuda market is very entrenched and it is recognized as the leading captive domicile. Nevis and Anguilla have also gone after the 'mom and pop' captives market but I do believe The Bahamas has some great benefits for that business. Our proximity makes it much easier to get to The Bahamas than Nevis or Anguilla."
Captive insurance provides a vehicle by which a company can self-insure, with an insurance subsidiary set up by a parent company to underwrite the insurance needs of the other subsidiaries.
A former Bermuda-based employee of Marsh & McLellan, one of the world's largest professional services and insurance brokerage firms which offers captive insurance, Gilbert was exposed to the benefits the industry created in that nation.
"There's a 38,000-strong work force in Bermuda. Of that 1,600 or 1,700 Bermudians are directly employed in the captives sector. The average compensation package is in the region of $200,000. We're talking about highly paying jobs here," he said.
Gilbert said that he sees a "wealth of opportunities" for Bahamians in the sector itself, and in ancillary sectors such as accounting and law.
Explaining the benefits of captive insurance for companies, Gilbert added: "If you set up a captive you own your own insurance company. You are handling all of your own insurance needs independent of any insurer. You don't need to meet domestic insurance capital requirements and essentially, when you pay domestic premiums roughly 25 percent of the premium is for administration costs, but if you're self-insured you retain that money. It stays on the books of the captive, but you then have access to the reinsurance market."
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