By Martin Eveleigh ACII

Since the introduction of the International Business Companies Act in 1984, successive governments have made such progress in developing the British Virgin Islands as a leading offshore financial services centre that today the Territory is the world’s number one offshore corporate domicile; some 365,000 non-resident companies have been registered since 1984.

The British Virgin Islands Government has a very client-focused approach to the provision and regulation of financial services. The Insurance Act 1994, which governs all insurance-related business in the Territory, ensures the prudent supervision that is necessary to maintain the financial reputation of the BVI but also allows the greatest degree of flexibility in a captive’s business plan. The Act and the Insurance Regulations 1995 set out the obligations of those who own and operate captives but the flexibility of the legislation is such that the Act gives the Governor discretion to waive any provision of the Act or Regulations.

The Government’s business-friendly attitude, the flexibility of the regulations and a very competitive cost structure have all contributed to the popularity of the British Virgin Islands as a captive domicile. In a few years the Territory has become a well-established domicile and it continues to experience significant growth. In 1999 no fewer than 50 new captives were licensed in the British Virgin Islands taking the total to 131.

The advantages of incorporating a captive in the BVI include:

  • capitalisation requirements are not onerous and the minimum capital required may, subject to approval, be in the form of cash or letter of credit
  • incorporation costs and insurance licence fees compare very favourably with other captive domiciles
  • competitive professional fees
  • applying for an insurance licence is relatively simple and well-prepared applications are processed quickly
  • most captives are incorporated as International Business Companies, which enjoy BVI tax exempt status
  • the redomiciliation of a captive to another domicile is permissible
  • there is no requirement for the appointment of local directors or for licensees to hold board meetings in the BVI which can result in considerable savings in both cost and time.


Any person carrying on insurance business in or from within the Territory must hold a valid insurance licence which is renewable annually. The licence may be for Long Term or General insurance or both. There are certain basic requirements to which all companies must adhere in applying for a licence and in conducting their on-going business:

  • the company must appoint an authorised resident insurance manager and maintain a principal office in the BVI (usually at the insurance manager’s office)
  • there must be no fewer than two directors and the company may not have a corporate body as a director
  • the company may not issue bearer shares
  • a detailed business plan must be presented with the application including projections for the first five years
  • details of owners, directors, officers and professional advisers must be submitted together with appropriate references
  • books and records are to be maintained in the Territory
  • annual audited financial statements must be provided
  • the company must be capitalised at least to the minimum level and must maintain a minimum on-going solvency margin.


Fees are due to the Government for company formation/licensing and for an insurance licence. Most captives are incorporated as IBCs and company fees are shown accordingly:

Company licence fees


Registration Fee*

Annual Fee

Authorised Capital:

Up to $50,000

Over $50,000







*includes first year’s annual fee.


Insurance licence fees


Application Fee

Annual Fee

Credit Life

Long Term/General





Minimum paid in capital required is $200,000 for Long Term, $100,000 for General and $300,000 for both. Credit Life companies require capitalization of $10,000.

The minimum solvency margin for long term business is $250,000. For general business it is determined by reference to the amount of Net Retained Premium (NRP) as follows:

Net Retained Premium

Solvency Margin

up to $500,000


Between $500,000 and $5,000,000

20% of NRP

Over $5,000,000

$1,000,000 plus 10% of NRP in excess of $5,000,000

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

For further information please contact us.

The author is Insurance Manager at KPMG in the British Virgin Islands, who provide insurance management services through a wholly-owned subsidiary, Belmont Insurance Management Limited.