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Entitled “Attitude towards Captive Insurance in Asia”, the survey found that close to 70 per cent of the respondents are “very comfortable” using Labuan IBFC as their captive domicile. (Logo from Labuan IBFC’s website)

KUALA LUMPUR: A recent survey commissioned by the Labuan International Business and Financial Centre (IBFC) showed that the risk management and insurance community are confident that the midshore centre has the right ingredients for businesses to establish their captive insurance companies.

Entitled “Attitude towards Captive Insurance in Asia”, the survey conducted by captive trade publication Captive Review found that close to 70 per cent of the respondents are “very comfortable” using Labuan IBFC as their captive domicile.

They agreed that access to regulators and strong legal as well as regulatory provisions are found to be the main consideration of 61 per cent of the respondents when choosing a captive domicile.

The availability of local captive infrastructure is also essential requirement for 75 per cent of respondents.

On the back of these requirements, more than half of those surveyed also agreed that Labuan IBFC retains a favourable reputation as a domicile, with more than 30 per cent agreeing that the midshore jurisdiction is strong captive domicile.

“We are pleased to see such positive responses and this reaffirms Labuan IBFC’s position as a business-friendly yet well-regulated jurisdiction for the region’s risk management needs,” Labuan IBFC Inc Sdn Bhd chairman Datuk Mohammed Azlan Hashim said at the inaugural Asian Captive Conference 2017 (ACC 2017) here today.

He said Labuan IBFC is one of the fastest growing risk management centres in Asia, with 43 captives established as of second quarter of this year with an aggregated written premium of up to US$500 million.

He said last year, Labuan IBFC recorded a total of an aggregated written premium value of US$348.6 million for its captive insurance sector and close to 75 per cent of the captive market contributions are from risk owners in Asia.

“We envisaged this positive trend to continue as Labuan IBFC is very focused on strengthening its presence in the captive market of Asia.

“We have indeed been cultivating this niche in self-insurance, particularly in captive insurance and will continue to do so,” said Azlan.

He said Labuan IBFC is also well positioned in the captive market as it is the only jurisdiction in Asia that offers protected cell companies and shariah-compliant captives for those who prefer captives to be governed by Islamic principles.

As the midshore centre continues to adapt and evolve its self-insurance, especially on the captive framework, Labuan IBFC Inc chief executive officer Danial Mah Abdullah said the jurisdiction is expecting to see a steady increase in the take up of captives in the region in the near future.

“With the Base Erosion and Profit Shifting (BEPS) increased measures on substance by the Organisation for Economic Co-operation and Development, corporates looking for a domicile for their captives have started to seek out well-regulated jurisdictions, which works well in Labuan IBFC’s favour.

“Labuan IBFC has always conformed to the international regulatory requirements and as a substance-enabling jurisdiction, the midshore centre also offers good captive infrastructure as well as experienced captive managers and intermediaries that understood both the local regulatory requirements and the international risk environment,” he said.

A captive is an insurance or reinsurance company established by a non-insurance parent company, to insure the risks of its parent or related/associated corporations.

Such risks include any legal risk that may be underwritten by a commercial insurer.

Over 75 per cent of the world’s Fortune 500 companies are parent owners of captive insurance companies, with total captive premium income exceeding US$100 billion, via the approximately close to 7,000 captives established worldwide.

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