Vol 20 (2023) - Issue 5

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Non-Compliant Transfers of Cayman Islands Insurance Business: To Void, or Not to Void, That Is the Question

Synopsis
Since the introduction of the Insurance Act in 1979, the Cayman Islands has established itself as one of the largest, and most sophisticated, centres for international insurance business. As of the first quarter of 2023, the Cayman Islands had almost 700 licensed insurance entities with more than US$86 billion in total asset value.
This article explores the recent decision of the Grand Court of the Cayman Islands (the 'Grand Court') in Premier Assurance Group SPC Ltd. (in Official Liquidation) v Providence Insurance Company I.I (for and on behalf of Premier Assurance Segregated Portfolio Puerto Rico SAP) and others on 17 May 2023 (the 'Judgment'), in which the Honourable Justice Sir Anthony Smellie KC held that a transfer of insurance business made in breach of the requirement to obtain approval from the Cayman Islands Monetary Authority (the 'Authority') pursuant to section 31(1) of the Insurance Act, 2010 (the 'Insurance Act') was void ab initio and of no legal effect. The decision is momentous as it was the first time that the Grand Court has determined the legal effect of non-compliant transactions under section 31(1) of the Insurance Act.