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Draft Rule and Statement of Guidance: Reinsurance Arrangements

The Cayman Islands Monetary Authority (“the Authority”) recently published a Private Sector Consultation Paper with a draft Rule and Statement of Guidance on Reinsurance Arrangements (the “draft Rule & SOG”). The draft Rule & SOG are intended to replace the current Statement of Guidance on Reinsurance Arrangements – Class A Insurers and better align our regulatory framework with international standards, including Insurance Core Principle 13 issued by the International Association of Insurance Supervisors, of which the Authority is an active member. Notably, this includes updating the regulatory measures in part to a Rule (which is binding) in order to ensure enforceability where appropriate.

The draft Rule & SOG apply to all categories of Cayman Islands insurance licensees, but only if they utilise an outward reinsurance strategy.

The Rule & SOG set out the requirements and associated guidance on (outward) Reinsurance Arrangements, including:

  • General requirements of the reinsurance program appropriate to the nature, size, and complexity of the business;
  • The requirement for a documented reinsurance strategy which must be appropriate having regards to the nature, scale and complexity of the ceding insurer, and the nature of its risk exposures. This strategy must clearly identify the objectives that are being pursued by using reinsurance. Class A Insurers, Class B(iii) Insurers, and Class D Insurers must submit the reinsurance strategy to CIMA at a minimum on a biennial basis. In the interim, all material changes to the reinsurance strategy must be submitted to CIMA for prior approval. All other Insurers must be able to provide their reinsurance strategy to CIMA upon request.
  • Assessments of impact of risk transfer.

 

To continue reading full articles in PDF format:
Draft Rule and Statement of Guidance: Reinsurance Arrangements

 


Rob Humphries
Counsel

Cayman Islands   +1 345 814 7793
Mobile  +1 345 922 1907


Derek Stenson
Partner

Cayman Islands   +1 345 814 7392


Sarah Farquhar
Associate

Cayman Islands   +1 345 814 7780


Philippa Gilkes
Associate

Cayman Islands   +1 345 814 7751


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