Insurance icon Barbados has been attracting international insurance companies to its shores for decades. Barbados is ranked among the top ten captive domiciles globally (Business Insurance).

Effective January 1, 2019, Barbados revised its suite of legislation, and with regards to insurance, repealed the Exempt Insurance Act Cap 308A and amended the Insurance Act Cap 310. All insurance entities are now licensed under the Insurance Act and are categorised into one of three classes  with a single tax regime as follows:

ClassActivityTax Rate
Class 1Companies that underwrite related party insurance business 0%
Class 2Includes companies underwriting third party business 2%
Class 3Insurance intermediaries such as brokers, agents and salesmen, holding and management companies, loss adjusters and assessors2%

The annual requirements for insurance entities remain the same as follows: 

  • Annual license fee to be paid by 31 January 
  • Audited financial statements to be filed six (6) months after the financial year end of the company (under review) 
  • Annual returns to be filed by 31 January of each year 
  • Annual general meeting of shareholders are required within 18 months of incorporation and thereafter within 15 months of the previous annual general meeting. 

Foreign Currency Permit

All entities that earn 100% of their income in foreign currency, from January 1, 2019, are entitled to receive a FCP. These entities benefit from:

– Exemption from exchange control
– Exemptions from property transfer taxes on transfers of shares or quotas
– Income tax concessions for specially qualified individuals as employees

 

Economic Substance Requirements 

The Business Companies Economic Substance Act took effect on 1 January 2019. This Act requires companies to satisfy the economic substance test in relation to any relevant activity carried on in Barbados by the company. The test involves an assessment related to the following:

  • The extent to which the company is being directed, managed and controlled in Barbados 
  • Adequate number of physically present employees in Barbados relating to the activity, whether or not employed by the resident company or by another  entity, whetner on a temporary or long term contract 
  • Adequate expenditure incurred in Barbados 
  • Adequate physical assets in Barbados 
  • Conduct of core income generating activities in Barbados i.e. predicting and calculating risk, insuring and reinsuring and providing insurance business services. 

Other Insurance Structures

Segregated Cell Companies

A Segregated Cell Company (SCC) is an entity containing assets and liabilities legally segregated from the company’s general account and those of the other segregated cell accounts. An existing Barbados company may be converted to a SCC and an external company may be registered as a SCC or continued as a SCC in Barbados.  A SCC must maintain records for the preparation of financial statements. 

Advantages of Segregated Cells: 

  • Legally protected from the adverse experiences of other cells, and the individual cell benefits accrue only to it. 
  • May be transferred to another segregated cell company or to an incorporated cell company (ICC). 
  • Enjoy the benefits of a captive insurance company without having to form their own captive. 

Separate Account Companies

These are legal entities comprising separate accounts that are segregated from the Insurer’s accounts and other segregated cell accounts. The separate account company differs from a SCC in the following ways: 

  • There are no multi-shareholder requirements 
  • An SAC does not place the core capital at risk like the SCC does 
  • The SAC is cost effective but less versatile 

Incorporated Cell Companies

An incorporated cell company (ICC) comprises incorporated cells as part of its legal corporate structure. Each cell of the ICC is a separate legal entity with its own directors who may be different from those of the ICC.   As separate entities, the cells within an ICC can transact business with each other and can sue and be sued. However, incorporated cells must have the same registered office as their ICC but may not own shares of the ICC. 

Additional Information: 

  • An external company may be registered as an ICC or continued as an ICC in Barbados 
  • An existing Barbados company can be converted into an ICC 
  • ICCs must submit annual returns for each of their incorporated cells 
  • An incorporated cell may be transferred to another ICC or to a SCC. The latter can also transfer cells to an ICC 

Advantages: 

  • Use of a common framework and central management can result in savings 
  • Assets/liabilities can be segregated according to class and risk 
  • Provision of a more robust segregation of assets than the SCC and the SAC