The rise of captive insurance in Mauritius as a strategic value-add

By Lorna Pillay, Head of Corporates, Private and Institutional Asset Owners,  Africa, India and Middle-East, and Shaun Geils, Global Head of Insurance

The vast majority of corporates, from the small to the globally renowned, must contend with the balance between profitability and risk management to sustain business growth. The more mature the business, the more sophisticated the solution required to appropriately manage risk and enhance profitability. Often, this means that traditional insurance options can no longer provide the level of flexibility required.

Worldwide markets, including emerging markets such as India and Africa, are turning their attention to captive insurance as a strategic solution to the profitability vs risk management problem. In Aon’s 2023 Global Risk Management Survey, 25% of respondents indicated that they currently use a captive (up from 17% in 2021). An additional 6% plan to establish one in the next three years.

This article explores why Mauritius is the captive insurance domicile of choice for African and Indian conglomerates, and how captive insurance can help corporates unlock new paths to value as they grow.

What is captive insurance?

Captive insurance is a type of self-insurance where a company establishes its own insurance company, called a “captive,” to manage its risk. The captive is owned and controlled by the parent company and can provide coverage for the parent company and its subsidiaries.

For conglomerates with complex operations, the benefits of structuring captives can be substantial. Captive insurance can optimise risk financing, enhance cash flow, and eventually return profits to the group. As a value-add service, captives align well with the strategic goals of companies seeking to effectively manage risk while retaining greater financial control.

Core benefits of captive insurance include:

• Control: Greater control over risk management and insurance costs
• Customisation: Coverage can be tailored to the specific needs of the parent company
• Investment: The opportunity to generate investment income on insurance premiums
• Reinsurance: Improved access to reinsurance markets
• Performance: Captives currently outperform the commercial casualty composite

Why Mauritius has emerged as a preferred jurisdiction for captives

Mauritius has steadily gained recognition as an ideal domicile for captive insurance thanks to a combination of regulatory flexibility, economic incentives, and proximity to key markets.

• Favourable tax regime with substance requirements: Captives in Mauritius benefit from a 10-year tax holiday, which enhances the financial viability of captive operations. Mauritius also offers double tax treaties with multiple countries to further enhance tax efficiency
• No foreign exchange control: The lack of currency restrictions makes it easier for businesses to manage cross-border transactions and optimise their financial flows
• Robust regulation: The Financial Services Commission (FSC) in Mauritius has created a supportive framework for captives, including recent updates to the Captive Insurance Act that allow for third-party captives
• Operational advantages: Mauritius offers a lower cost of operations than other established captive domiciles. Because skilled professional services are widely available, businesses can efficiently manage captive entities while enjoying high-quality service at competitive rates
• Proximity to African markets: As a gateway to Africa, Mauritius provides convenient access to growing markets, making it a strategic choice for conglomerates with African interests

Key trends in Mauritius-based captives

For Indian, Asian and African conglomerates with a certain level of profitability, establishing a captive is a natural next step. Captives offer businesses more control over their insurance programmes, allowing them to tailor coverage to their specific needs and potentially reduce their costs over time.

Several key trends are currently shaping the future of captives in Mauritius:

• Non-traditional risks: More captives are being established to cover risks like cyber threats, political instability, and supply chain disruptions
• Healthcare and life and annuity captives: Demand for healthcare and life insurance captives is on the rise, reflecting broader industry trends
• Reinsurance hub: Mauritius is positioning itself as a regional hub for reinsurance captives, attracting more business from Africa and beyond

Establishing and managing captives requires deep expertise across regulatory, operational, and financial domains. Contact IQ-EQ to learn why we’re the trusted partner for companies seeking to leverage the benefits of Mauritius as a premier captive domicile.

About the authors

Lorna Pillay, Head of Corporates, Private and Institutional Asset Owners at IQ-EQ, has been with the company since 2003. She brings extensive expertise with regard to client service delivery and corporate secretarial services, global business entity setup, fund, trust and foundation structures. Lorna holds a master’s in business administration, a bachelor’s in psychology, and is a qualified Company Secretary from ICSA: The Governance Institute.

Shaun is IQ-EQ’s Global Head of Insurance. With 20 years of experience in the financial services sector, across multiple product segments, including insurance, funds, corporate and private wealth. He’s a member of the South African Institute of Chartered Accountants and has worked in South Africa, Cayman Islands, Mauritius, UK and U.S.