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MAURITIUS AS A PURE CAPTIVE INSURANCE HUB

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Mauritius as a Global Business Jurisdiction

The key metrics that one explores before doing business in a jurisdiction are the country’s credibility, competence and the right infrastructures be it in terms of support from professional players, regulators, or the banks, that can provide enough comfort to potential investors and/or business owners. Mauritius has all these ingredients and is among the leading countries in Africa as highlighted in the Global Financial Centres Index report published in April 2024. This consolidates the fact that Mauritius is one of the preferred International Financial Centre in the region as well as globally.

On the move towards InsurTech

Mauritius has long been known for its global business solutions and now stands out with its Pure Captive Legislations, established through the Captive Insurance Act 2015. This Act was further enhanced at the end of 2023 to include other categories of Captive licences such as third-party captive and multiple-owner captive.  From a bird’s eye view, as of now globally, there are approximately 7,000 structures of Captives, of which more than 50% of the Captive Owners are from USA, 10% from Europe, 3% from Asia Pacific and less than 1% from Africa.  This is where Mauritius now comes into play to provide the right platform and legal framework to businesses, in the region as well globally, for an effective and efficient risk management.

Demystifying the Captive Concept

A Captive Insurance Company (“CIC”) is a subsidiary company whose main business purpose is to insure the risks of its parent and affiliated companies. However, a CIC is also allowed to underwrite Third-Party risks subject to certain conditions. Most companies use a CIC as a risk management tool to reduce their insurance costs by gaining direct access to the reinsurance market while also enjoying greater control over their risk program, particularly around policy’s terms and conditions. It goes even further since a CIC generates underwriting profits as well as investment income with considerable tax benefits.

Organisations that have taken such a considered & strategic approach have reaped considerable rewards and have found that an insurance subsidiary is the best means of administering a global risk management programme while at the same time bringing a synergy within the business structure.

It can be challenging at times to obtain cover for certain risks from conventional insurance companies and the beauty of a CIC is that it can provide cover for risks that are either unavailable or too costly to obtain from conventional insurance companies. A CIC can insure or reinsure all types of risk ranging from traditional to sophisticated/emerging risks be it General Insurance or Long-term Insurance categories. Typical coverage through a CIC can include general liability, product liability, professional liability and workers’ compensation while specialty/sophisticated risks can include cyber risk, political risk, business interruptions, directors & officers liability & intellectual property risk. And more recently, the concept of green captive is gaining momentum by taking into consideration Environmental, Social and Governance (ESG) risk implications from the business structure.

Value Proposition

Mauritius, being at the forefront of an International Financial Centre, has continuously been innovating with a view to providing a more diverse panoply of solutions to investors or business owners and the Pure Captive concept has been well received and applauded in the region and internationally.

The Act offers a range of licences, as listed below:

  • Pure captive – Mainly to insure risk of parent & subsidiaries.
  • Class 1 third party captive – A mix of insuring risk of parent/subsidiaries & associated entities.
  • Class 2 third party captive – A mix of insuring risk of parent/subsidiaries, associated entities and other third-party risks (subject to certain conditions).
  • Class 3 third party captive – Insure any risks linked with core product or service for parent & subsidiaries.
  • Multi-owner pure captive – Insuring risk of owners coming from common industry.

Captive structures are experiencing a steady growth year on year, with unending market challenges and sprouting coverage needs, proving their value as a strategic risk management tool for a wide variety of organisations across the globe. Captive Insurance Company brings modernity, dynamism, efficiency & synergy within the business structure. Fortree has the right expertise to accompany existing and potential captive owners through this process to ensure their business structures are impacted positively through this alternative risk management solution.

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