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The COVID-19 Pandemic: Opportunities and Implications for Captive Insurance

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Labuan IBFC Leads Asia in Captive Insurer Formations

Leading Arrow Blue-SF
November 06, 2019

A recent report, titled Driving Captive Transformation in Asia, revealed that 50 percent of all new captive incorporations in Asia are from Labuan International Business and Financial Center (Labuan IBFC).

According to the white paper, the total number of captive insurance companies in Asia grew by 10 with Labuan IBFC leading the way with half of these incorporations domiciled in the jurisdiction. Singapore came in second with three formations compared to Labuan IBFC's five.

In the report, 81 percent of respondents cited "regulatory environment" as the most important factor in choosing a captive domicile. The jurisdiction is known for its robust, modern, and internationally recognized legal framework enforced by its regulator, Labuan Financial Services Authority.

In addition, 76 percent of respondents felt that cell captive insurance companies are suitable for Asian risk management requirements.

Labuan IBFC is home to close to 200 insurance and insurance-related licensed entities, providing an "ecosystem" that supports captive formation as well as management, along with a solid banking and corporate services industry.

"As a midshore wholesale financial intermediation center, focused on delivering solutions to the Asian marketplace, [Labuan IBFC is] in good stead to continue" being the captive leader in Asia, said Labuan IBFC CEO Farah Jaafar-Crossby, "especially as the requirements of economic substance demand Asian captive owners seek a well-regulated, cost-efficient, and facilitative jurisdiction.

"In fact, as of mid-2019, Labuan IBFC already registered six captive formations, compared to the five registered for the whole of 2018, reinforcing the study's findings, which not only indicated an overall growth in understanding the role of captives but the jurisdiction's ability to continue to attract these risk management vehicles," Ms. Jaafar-Crossby added.

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