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The Lawfulness of Insuring ‘Morally Hazardous’ Business in the Cayman Islands

The Cayman Islands has become a hub for financial reinsurance and captive entities. These entities often write or reinsure traditional property and casualty risks emanating from various underlying businesses. Insurance is international and cross-border with the globalisation of insurance products and markets evolving at a rapid pace. As these products and markets evolve so does the diversity of the types of businesses seeking to avail themselves of captive and reinsurance structures. However, difficulties can arise when an underlying business is engaged in activities that are unlawful in the Cayman Islands such as the production and supply of cannabis.1 In these situations, insurance managers need to satisfy themselves as to whether any Cayman Islands law is contravened by the captive writing traditional risks or a reinsurance entity providing reinsurance for an underlying business that is engaged in the production and supply of cannabis in a jurisdiction outside the Cayman Islands. This article discusses some the key statutory provisions that would need to be considered.

Relevant Cayman Islands Law

The following is a list some of the key related regulatory laws in the Cayman Islands;

  • The Proceeds of Crime Act (2020 Revision);

  • The Criminal Procedure Code (2020 Revision)

  • The Anti – Money Laundering Regulations (2020 Revision);

  • The Penal Code (2019 Revision);

  • The Misuse Of Drugs Act (2017 Revision);

  • The Insurance Act (2010 Revision)

For the purposes of this article, we have focused on the Proceeds of Crime Act (2020 Revision) (the ‘POCA”) and the Misuse of Drugs Act (2017 Revision) (the “MDA”). However, each matter will be determined on its own facts and would need to be considered in light of the application of the relevant regulatory law.



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The Lawfulness of Insuring ‘Morally Hazardous’ Business in the Cayman Islands


Róisín Liddy-Murphy

Cayman Islands   +1 345 814 7371

Derek Stenson

Cayman Islands   +1 345 814 7392

1As of May 2017, medical cannabis became legal in the Cayman Islands as a prescribed drug to treat pain management. The recreational use of the drug is illegal under Cayman law.


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