Case Study: Captive Insurance Act 2015
In December 2015, the Mauritian National Assembly passed the Captive Insurance Act 2015, whose aim is to diversify the financial and corporate services sector as well as to boost the captive insurance market in Mauritius. The Act caters to the growing interest for such insurance in Mauritius and applies uniquely to “pure captives”. A captive is a subsidiary company that is incorporated to provide insurance for its parent company and its group affiliates. It is a form of selfinsurance that allows for substantial savings to be made on insurance premiums that would otherwise be paid to external insurance firms, and to insure low occurrence but heavy financial risks, such as consequences of terrorist acts.
The Act defines the requirements, obligations and licensing procedures of pure captive insurance businesses. It stipulates that captive insurers must hold a Category One Global Business Companies Licence (GBL1) along with an external insurance licence from the Financial Services Commission (FSC). In order to obtain the latter licence, the captive must apply through a captive insurance agent.
Furthermore, as a GBL1, the captive insurer will also profit from Mauritius’ Double Taxation Agreements (DTAs) and Investment Protection and Promotion Agreements (IPPAs).
As an incentive to promote this developing market, the Act amends the Income Tax Act 1995 by providing for a maximum of 10 years tax holiday for captive insurance companies.