As part of its long term strategy to grow the international financial services industry through new services and new client markets, the Parliament of the Cook Islands recently passed the Captive Insurance Act 2013. This Act follows the introduction of Foundations legislation in June 2012.
The Minister responsible when introducing the legislation stated that “The Government has made a commitment to diversifying our economy by encouraging, strengthening and promoting our financial services sector. The passing of the Captive Insurance Act will increase business opportunities and is an important step in the growth of this key
industry to our economy.”
Captive Insurance is essentially self-insurance allowing a company or groups of companies to provide adequate coverage of their risk at a lower cost than through large insurers.
The Cook Islands is a stable, well regulated jurisdiction; long established as a leading asset protection domicile. This bespoke piece of legislation complements and adds to the range of financial services available in the Cook Islands and offers another reason for professionals to do business with the jurisdiction. Important to note that it is in the same time zone as Hawaii, and therefore provides time zone advantages to both the USA and Asian markets.
Why form a captive insurance company?
1. Captive insurance companies may provide their owners with the following general
risk management benefits:
Access to insurance products not readily available from standard insurance brokers.
Ability to custom-tailor insurance policies for a specific business or industry.
Stability of premium pricing and a vehicle for financing selected risks.
Assurance that certain coverage will be available and will not be cancelled.
Control over underwriting, claims administration, and other operational decisions of
the insurance company.
Enhanced loss prevention through increased incentive to reduce claims.
Opportunity to recoup underwriting profit.
2. Captive insurance companies may provide their owners with the following wealth
Creation of an additional profit center.
Favorable tax treatment under section 831(b) or section 501(c)(15) of the USA Tax
Code (USA Persons).
Wealth transfer when the captive incorporated in a comprehensive estate plan.
Asset protection and removal of wealth from the reach of creditors.
Wealth accumulation as the captive invests its reserves and surplus.
Why Ora Fiduciary (Cook Islands) Limited
Ora Fiduciary, offers trustee, company formation and a wide range of administration
and consultancy services. We now offer the ability to establish and manage captive
insurance companies and provide consultancy services to entrepreneurs, high net worth
individuals and their families.