CAYMAN ISLANDS Law and Practice Contributed by: Jason Ta, Gemma Walters, Paul Walters and Ben Magahy, Travers Thorp Alberga
8. Insurtech 8.1 Underwriting Processes
its own regulatory capital and liquidity requirements (which may be adjusted by CIMA following their assessment of the business model of the licensee).
At present, there are no specific and material insurtech underwriting initiatives or developments in the Cay - man Islands, but conditions are conducive for this to change given the efficiencies achieved in bank - ing and financial services generally through utilising blockchain technology. It may only be a matter of time before the insurance sector also starts involving itself – the Cayman Islands has a significant insurance sector and a growing number of reinsurers are being licensed in the Cayman Islands. In general, the Cayman Islands’ supervisory and leg - islative framework adopts international standards, but also has in-built flexibility to enable CIMA and licen - sees to apply requirements according to the nature, size and risk profile of licensees. It may be useful to note that CIMA adopts a risk- based approach to regulating the insurance sector in the Cayman Islands. In particular, the Cayman Islands has elected not to seek Solvency II equivalency, which gives CIMA discretion to apply risk-based prudential standards, thus allowing insurers and reinsurers to implement their own internal regulatory capital model and structure their capital efficiently according to their risk profile. 8.2 Treatment of Different Types of Insurance The primary classes of insurance and reinsurance available in the Cayman Islands consist of (i) general insurance (which includes motor property damage and liability; crime; general liability; healthcare; hospi - tal professional liability and physicians’ liability; marine and aviation; medical malpractice liability; product liability; professional liability; property; surety bonds; and worker’s compensation) and (ii) long-term insur - ance (which includes life; annuity; accident and health; and deferred variable annuities). Any person carrying on insurance business, reinsur - ance business or business as an insurance agent, insurance broker or insurance manager in or from the Cayman Islands is required to hold a valid licence issued for that purpose under the Insurance Act. Amongst other things, each class of licence will have
9. Regtech 9.1 Regulation of Regtech Providers
Regtech providers may be regulated depending on their activities and whether they fall within the scope of a regulatory law in the Cayman Islands. As an example, a regtech provider focusing on identity verification may not be regulated, but if that technol - ogy is deployed in the course of that provider per - forming an activity that is regulated (eg, mutual fund administration), then the regtech activity will be regu - lated. 9.2 Contractual Terms to Ensure Performance and Accuracy Clear obligations with respect to timing of delivera - bles from the technology provider remain the key area of focus. Financial services firms seek to impose indemnification and liquidated damages provisions to assure performance and accuracy. These are primarily driven by industry custom. 10. Blockchain 10.1 Use of Blockchain in the Financial Services Industry In the financial services industry, there are a number of approaches being taken to implement blockchain – including: • proof-of-concepts and pilots – many traditional players are starting with small-scale projects to explore the potential of blockchain in specific areas, such as trade finance, payments or regula - tory compliance; • consortium-based initiatives – collaborations between multiple institutions which offers a less risky way to explore and develop blockchain solu - tions and share overall R&D costs; • investments and acquisitions – some players are investing in or acquiring blockchain start-ups to
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