Financial Services
Areas of Business:
Overview
The continuous growth of Asia’s (re)insurance markets has made Labuan IBFC as a jurisdiction of choice for insurers and insurance intermediaries. The strategic location of Labuan IBFC had attracted more than 200 (re)insurers and insurance intermediaries from South East and Far East Asia, America and Caribbean, Middle East and Africa.
The Labuan insurance industry comprises (re)insurers and captive insurers which underwrite either general (re)insurance business, particularly fire, engineering, and large and specialised risk such as aviation and liability risks; or life business. The Labuan captives have grown to become a prominent business sector in the Centre. Myriads of business structures exist for captive business which ranges from single or group captive to rent-a-captives.
The supply chain of the market is facilitated by insurance intermediaries which consist of insurance brokers, as well as insurance and underwriting manager. Whilst the former serves as a traditional distribution channel for (re)insurance, the latter two licensees provide essential backroom and specialised support for (re)insurers which prefers optimal and efficient business operation setups in the Centre.
Similar to Labuan banking, Labuan (re)insurance comprises both conventional insurance and the shariah compliant, takaful business. For the latter, takaful windows or operators are required to have an internal Shariah advisory board to ensure the continual shariah compliance of their business operations.
Frequently Asked Questions
A Labuan insurance business means an insurance business transacted in foreign currency and includes life, general, reinsurance, captive insurance, insurance manager, underwriting manager and insurance broking, but does not include domestic insurance business.
An applicant is eligible to apply for a licence to conduct Labuan insurance and insurance-related activities in Labuan IBFC if it meets the following criteria:
A Labuan captive insurer may underwrite direct insurance/reinsurance (general or life) business risks of their own group or third party risks subject to Labuan FSA’s approval.
A rent-a-captive is a captive insurance company that can be utilised by a number of users, or so called renters without voting control of the captive. While none of the users will own the rent-a-captive, each will enjoy the commercial benefits of a captive. The captive facility "rents" out its capital, surplus and licence to the policyholder and usually provides administrative services, reinsurance and/or an admitted fronting company.
Almost any kind of risk can be insured by a Labuan captive insurance company.
A labuan company may be incorporated as a protected cell company (PCC). In addition, an existing Labuan company can be converted into a PCC. The PCC has the ability to form "cells". The cells of a PCC may comprise:
The rate of tax imposed is 3% of audited net profits.
The income of the cell(s) under the PCC is taxed on a consolidated basis in the name of a Labuan PCC.
The dividends received from the Labuan PCC by the cells are tax-exempt.
The Labuan insurance and insurance-related companies business is governed by the following Labuan laws:
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