By the end of the third-quarter of 2012, the British Virgin Islands had 156 captive insurers and 34 domestic insurers. Although the British Virgin Islands is still a popular captive insurance hub, the number of captive insurers has declined from 88.8% in 2008 to 86% in 2011, following a long downward trend.
In the 1990’s, 2,000 captive insurance companies operated on the British Virgin Islands with only 156 present in 2012. The main reason for the large number of captive insurance companies during the 1990’s was the nation’s low capitalisation requirements. Due to the emergence of other offshore and onshore insurance jurisdictions, the volume of captive companies was knocked down. Another key to the decline was the revised financial service laws, made by the British Virgin Islands to comply with international standards.
Introduction of a new insurance law
The Financial Services Commission (FCS) introduced the Insurance Act 2008, which was a revision of the 1994 act. The new act came into force on February 1st 2010 and was intended to provide a more transparent and cost-effective industry framework. The new act, alongside the Insurance Regulations 2009 and Regulatory Code 2009, provides more clarity than the previous system. It was formulated to meet the principles of the International Association of Insurance Supervisors (IAIS) and the EU’s Solvency II legislation.