Mauritian government hears Captive Bill reading

After much debate it has accepted a compromise solution on tax, choosing what is known as the ‘Singapore solution’ and a 10-year tax holiday. Prior to the current Insurance Act in Mauritius there was a separate Act dealing with captives. However, when the Insurance Act 2005 was passed, for whatever reason, captives were subsumed into the general Act with the consequence that it is very difficult to extract the provisions relating to captives in a coherent way to create a clear picture. Captives lost visibility under the Insurance Act 2005 and hence Mauritius declined as a captive domicile of choice.hidePeople looking to set up a captive could not pick up the Insurance Act 2005 and readily discern what the legal requirements were for setting up a captive in Mauritius, so they went elsewhere. People also took the view it signaled Mauritius was not interested in having captives domiciled in Mauritius. The Financial Services Commission was not even able to say how many captives there were in Mauritius because captives were, in a legislative sense, invisible. Accordingly, without a new, international best practice Captive Insurance Act, Mauritius would continue to be ignored as a captive jurisdiction and other jurisdictions, many of which don’t have the advantages Mauritius has, would steal a march on Mauritius. The Captive Insurance Act applies only to “pure captives”. Under the Schedule to the Act that means: “The business of undertaking liability restricted exclusively to the risks of the parent and affiliated corporations”. In other words, it only regulates ‘first party’ not ‘third party’ captives; the latter will remain under the external insurance provisions of the current Insurance Act 2005. At some later stage, the laws relating to third party captives may also be reformed but not in the short term. Captives under the new Act will also only be able to underwrite or reinsure general insurance business and not long-term (life insurance) business. A captive under the new Act may also not cover risks where there is a required element of compulsory insurance in Mauritius (eg third party liability insurance for motor vehicles). Some elements under the new Act will be spelt out in Regulations and Rules, which could not be made until the Act was passed and will now have to be put in place by the Financial Services Commission. In a joint statement Max Fulton, who was director of the Financial Services Commission when the Act was being drafted and is now an independent consultant on captives and regulatory matters in Mauritius, and Marc Hein, head of the legal firm Juristconsult and a former chairman of the Financials Services Commission, said in relation to the new Act: “While captive insurance has been widely used as a risk management tool in advanced economies, its use in the Indian Ocean and African region remains low. Africa is expected to grow very fast economically in the next few decades. “Mauritius with its close proximity to Africa, its sound regulatory regime, the availability of a wide range of professionals and now, with a new best international practice Captive Insurance Act, is strategically positioned to serve the insurance needs of companies in this fast developing economic region and to establish itself as a domicile of choice for captive insurers, particularly those focusing on Africa. This legislation will also reinforce Mauritius’ status as a regional insurance hub.”

Mauritian government hears Captive Bill reading

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