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Labuan IBFC, Leading Asian Captive Domicile

Arrows Pointing Up-SF
August 07, 2018

Labuan International Business and Financial Center (Labuan IBFC) approved four captive insurers in the first half of the year, and the domicile reports that it leads the Asian region in captive formations over the last year.

To date, 47 captive insurers have been approved by Labuan Financial Services Authority (Labuan FSA), said Dato' Mohammed Azlan Hashim, chairman of Labuan IBFC Inc., in his welcome remarks at the Asian Captive Conference recently held in Kuala Lumpur.

He continued, "Labuan IBFC is one of the fastest-growing risk management centers in Asia. This is evidenced by the fact that it is one of the financial centers in the region that approved the most captive entities in 2017, with more than 60 percent [comprised of non-Malaysian] premiums.

"A total of six captives were approved by Labuan FSA [with] a … gross premium of $360.9 million … underwritten last year," he said. Mr. Hashim said that in the first half of 2018, Labuan FSA had already licensed the same number of captives it did for the entirety of 2017.

Mr. Hashim went on to suggest that self-insurance tools such as captive insurance could be an ideal option to manage and mitigate new and emerging risks from digital threats. "Risks are dynamic, and risk profiles in new technology are even more so. Needless to say, the risks arising from digital threats are multifaceted. The ability to keep pace in this new digital landscape is no mean feat and, perhaps, self-insurance coverage such as captive insurance is an ideal option to manage and mitigate these risks. 

Meanwhile, Labuan IBFC Inc. CEO Farah Jaafar-Crossby said, "Labuan IBFC also offers protected cell companies (PCCs).... There are … other financial centers in Asia that are currently exploring the use of this structure, but the fact that we are the pioneer in the region—having the legislation set in 2010, gives us an edge among our peers in the region. 

"Having said that, the appreciation towards the PCC structure is relatively low and there is much to be done to increase the awareness on the benefits of this structure to the Asian businesses. We are working towards this—be it educating or providing market feedback to the regulators to better our structure, and we are certainly working closely with the regulator for the benefits of our clients and the jurisdiction. So, do watch this space for more updates," Ms. Jaafar-Crossby said. 

She added that Labuan IBFC's commitment to generating awareness of the benefits of self-insurance in Asia will continue in the years to come. "We hope to be able to champion the benefits of self-insurance in Asia, especially as the risk management environment across the globe becomes more and more challenging," she said.

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