CAPTIVE INSURANCE TO BE LABUAN IBFC’S STRATEGIC ROADMAP PRIMARY FOCUS

By Jailani Hasan

LABUAN, Dec 2 -- Labuan International Business and Financial Centre (Labuan IBFC) has charted a 28 per cent increase in its premiums for captive business and 18 new captives approved as at the third quarter of 2021, said Labuan Financial Services Authority (Labuan FSA).

Its director-general, Nik Mohamed Din Nik Musa said there has been a notable rise in captive’s popularity globally, driven not just by the pandemic but also insurance market challenges and natural catastrophes. 

bootstrap slideshow

“Proving to be an effective tool in responding to risks and changing market conditions, captive formations have been on a steady rise,” he said during his virtual welcome address at the fourth Asian Captive Conference (ACC) today.

He said the Labuan captive business model, which utilises protected cell companies (PCCs), has gained traction as a cost-effective method of operating captives, and this could be attributed to a greater appreciation for self-insurance as a component of a dynamic risk management strategy as well as the recognition of its cost advantages in light of the hardening re(insurance) market. 

“Labuan FSA will continue to focus on strengthening Labuan IBFC’s position as a captive domicile hub by making the captive sector a primary focus in its Strategic Roadmap for the next five years.

“One of the goals is to strengthen Labuan IBFC's complementary role to Malaysia's economy which will include the development of the Labuan insurance industry as a whole,” he said.

Meanwhile, Labuan IBFC Inc chief executive officer (CEO), Farah Jaafar said the growth of 18 new captives as of the third quarter was a marked increase from the seven captives incorporated over the same period last year. 

“Clearly, the harder insurance market already prevailing pre-pandemic and made even harder by the pandemic has allowed risk management professionals to truly bring the benefits of self-insurance to the fore,” she said.

Farah said with cell captives effectively lowering the barrier entry, smaller businesses are able to partake in self-insurance vehicles allowing for better cost efficiency vis-à-vis their insurance programme while adopting a holistic risk management strategy.

The CEO also said Labuan IBFC’s continued commitment towards developing robust risk management and reinsurance “toolbox” would entrench the jurisdiction’s leadership in the global captive market.

The virtual conference, jointly organised with the Labuan International Insurance Association (LIIA), was attended by more than 350 delegates comprising risk management professionals, business owners, leaders of global corporations, and corporate advisers.

-- BERNAMA