Selecting a Domicile

Issues to consider when forming a captive are as follows:

4.1.Political Stability

A stable political environment is essential to ensuring that laws are not suddenly changed that could impact a captive's assets.

4.2. Cost

Different domiciles have different laws regarding the amount of capital that is required to start a captive. One of the main advantages of using an offshore domicile is that the capitalisation and surplus requirements of starting up a captive are much lower than they would be for forming an onshore insurance company.

4.3. Regulatory Requirements

Similarly another advantage of an offshore domicile is that reporting, auditing and loss reserving requirements are more advantageous than they would be for an onshore company.

4.4. Accessibility

It is often a requirement that board meetings are held in the captive's domicile and consequently it makes sense to domicile a captive in a convenient location. Being close to or in the same time frame is helpful when communicating with local service providers.

4.5. Availability of Talent

Ensuring that professionally competent people and local organisations are available to manage a captive as well as to handle funds is an important issue to consider.

4.6.Fronting Company and Reinsurer Requirements

Insurance companies and reinsurers will need to approve a domicile as well as the individual captive being used.

4.7. Fees and Taxes

These vary by domicile and need to be determined as part of the overall cost.

4.8. Formation Time

Generally the more established a captive domicile is the quicker the captive formation process will be.