Africa-Press – Mauritius. A captive is a wholly owned subsidiary created to provide insurance to its parent company and group. It is essentially a form of self-insurance where the insurer is owned and controlled by the insured to insure the risks of its owners.
The Captive Insurance Act 2015 was recently passed before the National Assembly and the law will now be proclaimed in stages. This Act was drafted under the aegis of the Final Services Commission a few years back and was finally presented by the Honourable Minister for Financial Services and Good Governance in December 2015.
This is a very positive move for the diversification of the financial and corporate services sector. It is a much awaited law as there is a real interest for the incorporation and domiciliation of captive insurance in Mauritius.
This new Captive Insurance law is a fine and modern piece of legislation which should establish our jurisdiction as a domicile of choice for captive insurers focusing on Africa – and why not Asia as well.
The Act only applies to “pure captives” meaning the business of undertaking liability restricted to the risks of parent and affiliated corporations. The Insurance Act 2005 which has now been amended was previously governing captives but, unfortunately, not in a satisfactory manner.
Captive insurers will be regulated by the Financial Services Commission and can also be slicensed as Global Business Companies Category I. The Second Schedule to the Act amends the Income Tax Act to provide for an attractive tax holiday on income derived by captive insurers for a period not exceeding ten years.
The licensed captive insurer being a corporate resident of Mauritius, will also beneficiate from the Double Taxation Agreements (DTAs) and the Investment Protection and Promotion Agreements (IPPAs) enjoyed by Mauritius internationally.
A captive is a wholly owned subsidiary created to provide insurance to its parent company and group. It is essentially a form of self-insurance where the insurer is owned and controlled by the insured to insure the risks of its owners.
It reduces costs and risk management and enhances risk control. Instead of paying premiums to an insurance company, a large group will create its own insurance company to insure its own risks.
These captives do not offer insurance to the public. They do not cover life insurance business or items such as liability for motor vehicles. The types of entities forming captives vary from the large multinationals to non-project organisations and, in fact, most Fortune 500 companies have their own captives.
As a reminder, Mauritius continues to position itself as the best international financial and corporate platform to invest in Africa. On top of being an exemplary democracy, a country where the Judiciary is a watchdog for the Rule of Law, Mauritius is always coming first of the class in Africa in the Ease of Doing Business Index of the World Bank and the Mo Ibrahim Index for Africa.
Our knowledge of English and French to accompany investors towards Anglophone, Francophone and why not Lusophone Africa, is also a plus mark to attract investors to the country.
Jurisdictions like Bermuda, Guernsey, Cayman Islands and even USA states like Vermont and Wyoming thrive on captive insurance. There is room for Mauritius in our part of the world to develop this business.
Captive insurance may sound like an unknown and technical sector but management companies, lawyers, accountants, company secretaries, bankers and, indeed insurance professionals should study the subject as it is a sector which can develop very quickly and profitably.
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