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US owned captive insurers are increasingly looking to the USA for vehicle formation in order to reduce costs, according to comments made at the Bermuda Captives Conference held in June.
Over 800 delegates attended this year’s Conference and locally based Barclays captives specialist Colin Freeman/Colleen McHugh were there to see what developments would be affecting the Isle of Man/Guernsey.
Other attendees included professionals from banks, investment companies, lawyers, insurance brokers and accountants.
The three day conference featured a series of sessions for delegates on key topics in the industry including regulation, investments, economic and market developments, trends, tax, potential new markets, and emerging business such as insurance linked securities (ILS).
Mr Freeman, who is Vice President, Captive Insurance at Barclays, said: “As a domicile Bermuda faces many similar challenges to other offshore islands such as Guernsey and the Isle of Man.
“There is fierce competition for new business amongst the captives managers in each jurisdiction. Bermuda’s challenge is to add sufficient value to justify the relatively high cost for clients of using them which means a focus on quality, access to professional services, and a top reputation. This is a challenge that we face here as well.
“There are almost 800 captive insurance companies in Bermuda, and the island is home to many of the largest global and longest established captive insurance companies. There is a growing challenge however with a trend towards onshore United States for new formations, where captives’ costs are lower.
“The new captives tend to be smaller and fees compressed, making a low-cost jurisdiction more attractive. This trend will require the service providers to adapt their propositions to ensure the offshore captive service remains competitive and relevant whilst still emphasizing the accessible expertise and concentration of skills the island domiciles can offer”.
