Labuan Captive Insurance

A Labuan captive business is defined as an insurance business where the insured is a related corporation or an associated corporation of the Labuan insurer or where the insured is any other person in respect of whom the Labuan insurer is authorised by The Authority to provide insurance or reinsurance.

Captives may be established under a conventional insurance structure or under a takaful structure.

Benefits of Captive

Key benefits of setting up a captive include:

  • To insure otherwise ‘uninsurable’ risk
  • Control an entity’s own insurance programme, which in turn will stabilise the premiums paid
  • Create direct access to the reinsurance markets, thus reducing premiums payable
  • Enjoy potential tax benefits
  • Consolidate deductibles across the entity’s group of companies
  • Reduce dependency on commercial insurers/reinsurers
  • Insulate the entity’s group of companies from insurance market cycles.

 

Types of Captives Available

A captive insurance entity in Labuan IBFC may include, but is not limited to, the following forms:

  • Pure/Single captive
  • Group/Association captive
  • Master rent-a-captive
  • Subsidiary rent-a-captive
  • Captive using Protected Cell Company (PCC)
  • Multi-owner captive.

 

Licensing and Operational Requirement

  1. Applicant must maintain a minimum paid-up capital or working fund amounting to a specified amount in any foreign currency with a bank in Labuan in accordance with the type of captive licence as follows:

     

    PAID-UP CAPITAL / WORKING FUNDS AMOUNT (RM)
    Pure/Single Captive 300,000
    Group Captive/Association Captive 300,000
    Multi-owner Captive 300,000
    Master Rent-a-captive 500,000
    Subsidiary Rent-a-captive 500,000
    Cell Captive 500,000
  2. Applicant must be a member of the Labuan International Insurance Association.
  3. Applicant for a licence to carry on a captive business in Labuan must:
    • Have establish an operational management office in Labuan managed by a management team that has adequate knowledge and expertise in the insurance business; or
    • Appoint a licensed Labuan underwriting manager.
  4. Appointment of any person in control, director, or Principal Officer (PO) of a Labuan reinsurer must obtain prior approval from The Authority
  5. The person in control, director and PO of a Labuan reinsurer must be of fit and proper persons and shall not be subject of any adverse report from any reliable sources

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