The Cayman Islands are the world's leading domicile for healthcare captive insurance companies and with over 752 captive insurance companies as at end of June 2007, is the second largest offshore centre for captive insurance.
As an international insurance centre the Cayman Islands has experienced significant growth since the creation of the industry in the 1970s, with the sector often experiencing double digit growth rates from year to year. Captive insurance companies are insurance companies that carry risk originating primarily from its owners or affiliates. The owners of captive insurance companies are typically not in the insurance business. They usually set up a captive because they are either unable to obtain a certain type of coverage through conventional onshore insurance companies, or are able to self-insure at premiums significantly lower than those available in the open market. Healthcare captives have traditionally formed up to 30% of the Cayman Islands captive insurance sector, and the jurisdiction is gaining prominence in a number of other areas of insurance such as workers' compensation and employee benefits. The vast majority of Cayman Islands captive insurance business originates from the US with Latin America and the Caribbean and Europe representing the majority of the balance. Cayman demonstrated its innovation in 1998 when it introduced the segregated portfolio company ("SPC") structure for the insurance sector. This cutting edge legislation enabled various users to use the same captive insurance entity and is gaining popularity among clients who do not wish to have their own captive. The structure conveniently allows for a clear separation of assets and liabilities. Insurance licenses are issued under the Insurance Law and the Cayman Islands is a member of the Offshore Group of Insurance Supervisors.