The Cayman Islands wants to become a major player in the reinsurance market and is taking steps to persuade new reinsurers to domicile with them rather than Bermuda.

An insurance industry leader from the British Caribbean territory explained the groundwork that is being done now to establish an industry while minimising the challenges, especially in Immigration and housing, that expansion has brought to Bermuda.

“We’re not going to say that we’ll be the next Bermuda, but Cayman does have an opportunity,” said Daniel MacLean, chairman of the Insurance Managers Association of Cayman (IMAC).

The new town of Camana Bay is well on the way to completion on a 300-acre site, primarily to cater to the needs of expanding business, and the Government is considering enacting reinsurer-friendly legislation.

The Cayman authorities have also set up a task force to look at the wider implications of building a reinsurance industry, including immigration, housing and the attraction of highly qualified professionals.

Mary-Lou Gallegos, the outgoing head of insurance at the Cayman Monetary Authority explained in a speech last year: “We want to get it right the first time.”

At the Cayman booth at the Risk and Insurance Management Society (RIMS) annual conference in New Orleans this week, Mr. MacLean said there were solid reasons to believe that Cayman could attract major reinsurers.

“Already we have hedge funds, captives and banks in Cayman,” Mr. MacLean said. “If people are confident enough to have their hedge funds in Cayman, then it does not take an enormous leap of faith to believe they could base reinsurance companies here.”

In 2004, Greenlight Re incorporated in Cayman, the jurisdiction’s first property and casualty global reinsurer, capitalised with $250 million. In January this year, Greenlight filed to make an initial public offering in the US. It made net income of $45 million for the 12 months ended September 30, 2006.

Although Greenlight’s arrival has failed to spark a rush of reinsurers flocking to Cayman, Mr. MacLean believed that others would follow as they sought to avoid the problems with expense and limited space that faced rival Bermuda.

“We are looking for a handful more so we can create a marketplace,” Mr. MacLean said. “Greenlight has been very happy with its experience in Cayman and we have many advantages.

“Unlike Bermuda, we have the physical space to expand.

“We’ve made huge progress building Camana Bay, which will bring a lot of office, retail and residential space.

“We have no restrictions on foreign ownership of property and no restriction on cars. We have no waiting list for private schools.”

Cayman is already the biggest offshore hedge fund centre and is second behind Bermuda in the offshore captive market.

Offshore jurisdictions tend to have a bad name with many keen to characterise them as tax havens where crooks hide their ill-gotten gains.

Mr. MacLean said the Cayman government had been proactive in tackling the image problem.

“Delegations have made trips to Washington to meet and greet and educate,” he said. “What they have found was that the level of knowledge of what offshore centres do and why they exist ranges from complete novice to those with a slightly better understanding.”

He said it was “easy to pick on a little Caribbean jurisdiction”, while overlooking the important role that Cayman played as the home of many US companies’ healthcare captives — a line that accounts for close to 40 percent of Cayman’s business.

Cayman targets reinsurers