Sep 2026
In June 2026, the Cayman Islands Monetary Authority (CIMA) published the results of a thematic review of a sample of reinsurance companies holding Class B(iii) and Class D licenses. The review, conducted between mid-2025 and the first quarter of 2026, assessed compliance with The Insurance Act, 2010 (as revised) and related regulatory framework, while also evaluating alignment with recognised industry standards. While the review examined stress testing, cash flow testing, and capital and collateral adequacy management, the headline finding was unmistakable: corporate governance weaknesses accounted for a striking 68% of all deficiencies identified. For boards and management teams across the reinsurance sector, the report delivers a clear message: governance fundamentals demand renewed attention.
Board Oversight and Accountability
A persistent theme throughout the review was insufficient board oversight with 20% of all corporate governance weaknesses relating to boards failing to clearly define or document the roles and responsibilities assigned to directors. CIMA also found insufficient evidence from board meeting agendas and minutes to confirm that directors were receiving and reviewing key risk reports. In some cases, entities were not even convening formal board meetings, which accounted for 7% of the governance findings. A further 7% of deficiencies stemmed from boards not conducting periodical self-assessments of their own performance.
CIMA’s recommendations on this front are clear: boards must establish well-defined roles and responsibilities for their members, hold regular and formally documented meetings with comprehensive meeting minutes, and conduct periodic self-assessments to ensure accountability and identify weaknesses in governance processes.
Sub-Committee Governance
Sub-committee governance was the joint-largest area of weakness, also representing 20% of the corporate governance findings. CIMA observed that several entities could not demonstrate that sub-committee meetings had taken place, while others failed to maintain appropriate documentation. In some instances, Audit Committees were not effectively fulfilling their duties in accordance with their charters and relevant regulatory requirements, and certain committees operated without charters altogether.
This is a reminder that a well-functioning committee structure is not merely a box-ticking exercise. Boards should ensure that committee mandates are appropriately documented, consistently applied, and subject to regular review.
Segregation of Duties and Internal Audit
The review found that 13% of the corporate governance findings involved inadequate segregation of duties, including situations where a single individual held multiple roles, such as pricing and approval of reinsurance treaties, without appropriate safeguards. An equal share of findings related to the lack of an effective internal audit function to ensure ongoing monitoring of internal control systems.
CIMA recommends that regulated entities establish independent review mechanisms for internal control systems, including through periodical internal audits (by an in-house function or alternatively outsourced to a third-party provider). These findings underscore the importance of structural controls to mitigate conflicts of interest and provide assurance over key risk areas.