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More About Captive Insurance in the Isle of Man

The Isle of Man is situated in the Irish Sea, off the coast of England and Ireland, with a population of 70,000. The main industries associated with the Isle of Man are tourism and offshore finance.

The Island has been showing signs of sustained growth over the past 25 years (having been a recognised captive domicile for over a quarter of a century), and has an excellent background in corporate structures to allow for effective risk management.

As large companies look to the value of captives as part of their risk management strategy, they must look to all the options and structures available to them. The Isle of Man has a vehicle called a 'Protected Cell Company' (a limited company seperated into legally distinct portions, or 'cells'). In March 2004, the Insurance and Pensions Authority introduced regulations to allow protected cell companies to carry on insurance business in or from the Isle of Man.

Effective 1st April 2006, all IOM captives became liable for zero per cent tax rate

In March 2004, the Authority introduced regulations to allow protected cell companies to carry on insurance business in or from the Isle of Man. The intention of these regulations is to mirror, as closely as possible, the provisions of the insurance regulations already in force on the Island. The regulations provide for the establishment of new protected cell insurance companies, and also for the conversion of existing insurance companies into protected cell companies.

What is a PCC?

A protected cell company, or PCC, can be thought of as being a standard limited company that has been separated into legally distinct portions or cells. The revenue streams, assets and liabilities of each cell are kept separate from all other cells. Each cell has its own separate portion of the PCC's overall share capital, allowing shareholders to maintain sole ownership of an entire cell while owning only a small proportion of the PCC as a whole.

PCCs can provide a means of entry into captive insurance market to entities for which it was previously uneconomic. The overheads of a protected cell captive can be shared between the owners of each of the cells, making the captive cheaper to run from the point of view of the insured.