Puerto Rico is ramping up its efforts to become a reinsurance capital that it hopes will rival Bermuda and the Cayman Islands, according to a representative of the Puerto Rico department of insurance.
At press time, the first application of the International and Offshore Center is close to being approved and another company is in the process of submitting a formal application, according to Osvaldo Ramirez Bermudez, a director with the Center and a representative for the Puerto Rico insurance department.
Nine companies are presently conducting due diligence examinations to determine whether to establish operations in Puerto Rico and 2-3 local companies are considering forming reinsurance operations, Bermudez says.
The idea was first raised over 30 years ago when Harold Shapiro, who headed up Puerto Rico’s department of economic development, raised the idea. It was resurrected in 2003 and on July 9, 2004, Puerto Rican legislature passed legislation to form an entity (the International and Offshore Center) that would oversee the writing of insurance on foreign risks, reinsurance and Puerto Rican excess lines risks.
The legislation went into effect in March 2005, and in June 2005, regulations were put into place so that the law could be implemented.
The law creates 5 classes of authority that include pure and association captives, two property-casualty classes, and, an unrestricted life and disability class. The life insurance class permits companies with this authority to write disability, life and reinsurance disability and life business.
Among the companies expressing interest at this point, according to Bermudez, are two from Latin America that write life reinsurance with the remainder being property-casualty companies.
The goal is to reach a decision on applications within 30 days of submission, Bermudez says. International companies that are given authority are granted an exemption from all Puerto Rico taxation.