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Insurance companies in Vanuatu are registered under the Insurance Act and may be registered as local, external or “exempted” insurers.

Although exempted insurers are precluded from insuring risks within Vanuatu and from soliciting business within or outside Vanuatu, there are many uses and advantages for the exempt insurer. The Act does provide for discretion for the Insurance Commissioner in its application, generally operations can be carried out where a licenced insurance broker is utilised in the jurisdiction where the risk originates.

Exempted companies must file annual returns, hold annual general meetings and have a resident director. BDO Barrett & Partners can assist you with meeting all these requirements. 

Strict secrecy provisions apply to exempted companies and, despite the additional reporting requirements, the secrecy is complete, i.e. no papers filed are accessible to the public. 

The exempt insurer is designed primarily to encourage “captive insurance”. Captive insurance companies are generally owned, or associated with, the companies they are insuring and they underwrite risks on a restrictive basis.

Captives may be used to underwrite 100% of a risk. Alternatively, the captive may reinsure, partially or wholly, through conventional underwriters.

Why is captive insurance so attractive? Captive insurance allows companies to self-insure when excesses and premiums become prohibitive in normal channels and in instances where there is a low likelihood of claims on certain risks. Captive insurance policies can be more tailored to the needs of the insured party and are cheaper because broker and administration costs are eliminated.

There are also tax benefits arising from the deductibility of insurance premiums and there is an absence of tax on premium income received by the captive insurance company incorporated in a tax haven. 

There are certain guidelines as to who can obtain an insurance licence.  BDO Barrett & Partners has many years experience dealing with Vanuatu’s Financial Services Commission and can assist you to sort through all the requirements. For further information, contact one of our partners today.