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Have domicile, will travel


You're sitting around with a few mates, having some laughs and watching football, or, if you have three or four days to kill, a cricket match.

The subject of work comes up and you explain for the umpteenth time what a risk manager does. But the blokes you hang out with are your school friends who load trucks down at the warehouse and all they hear is that it has something to do with insurance.

This time, you throw them a curve and announce: "I'm setting up a captive."

Blank stares. "And Bermuda, Cayman and Dublin are all in the running."

They couldn't care less what "captive" means. But their ears lift a fraction when you mention those places. Never mind Cayman is a new word for them. It sounds exotic.

This is where domicile selection really begins. All the boardroom presentations on flexible regulations, claims control, tax considerations were just a warmup. If those are your criteria, throw a dart at the map. All domiciles have those.

What you're really looking for—even though you would never tell your chief finance officer—is a place that will impress your friends. Somewhere remote where you can relax for a few days. It's easy enough to find a jurisdiction where you can save the company some money. What you need is help in sorting out the real reasons for picking a domicile.

The selection process really comes down to just three factors: beaches, golf and food. So let's have a look at some of the most popular domiciles and consider how they hold up in those categories.

When I first visited Cayman in the late 1980s, Georgetown was a sleepy little diver's town with a few moldy motels and a Holiday Inn. As it has exploded into a major resort destination, the domicile's captive count has steadily climbed (proving our point quite nicely about domicile selection criteria).

I can vouch for the quality of Seven Mile Beach and the well-prepared food in Cayman, but have not sampled the golf there. I must say, though, that this domicile does not seem to be a sound selection for a European risk manager. It's a very long way just to visit a nice beach and sample the cuisine.

If golf is high on your list of domicile priorities, Bermuda is a safer bet. Ever notice at conference golf tournaments that the winning foursomes are always from a Bermuda management company? Makes you wonder how long it really takes to set up a captive.

Bermuda has a nice selection of restaurants, too. But its beaches are quite a distance from the business center of Hamilton and during the winter and early spring, you may get pounded with hail and high winds.

If you're a beach person, invent a reason to locate in Hawaii. Convince management to open a U.S. branch on the west coast if that's what it takes. Honolulu is a traffic-snarled mess and Waikiki is an overrated tourist trap. Get your business done quickly there and fly out to lush Kauai. This domicile will really get the lads' attention back home.

The other side of America is home to Vermont, the most aggressive domicile in the world. Don't worry about evaluating it. If they want you there, they will come and get you.

Top European domiciles have advantages that are not easy to ferret out. You live here, so the exotic factor is going to be a little harder to achieve.

In fact, before leaving on a recent round of interviews, I was warned by a couple of jaded editors that Isle of Man would be a hardship experience. Gloomy, they said. Nothing going on.

Well, I suppose if you're used to covering reinsurance in Monte Carlo and all of that, the Isle of Man might seem something of a backwater. But I found it to be quite a peaceful little jewel. Granted, I hit it with fine weather. On a long bus ride through the rolling green countryside, I felt I was lost in Ireland.

Douglas is a fine little town at the end of a long, curving strand. In one of its restaurants, I had one of the finest seafood meals I've eaten. And that's saying a lot from someone who lived for many years in New Orleans. Big points for a restaurant domicile.

Dublin is a great, gritty, financial center with a working man's feel to it. The pubs are unbeatable and you can find any cuisine in the city's restaurants. If you're a real foodie, build enough time in your domicile selection process to scoot down to Kinsale, the gourmet capital of Ireland, and eat yourself silly.

If you're considering Guernsey, your CFO will be impressed by your selection of a well-established domicile but your mates will say, "Huh?"

Okay, so it's not ritzy. But it's comfortable. Neat little lanes that wind through neighborhoods. A bustling shopping district. Captive managers and regulators all in the same few blocks.

Invite your pals along and call it a field trip. Load them up on beer, and fish and chips, and settle in for some football on the television. That's enough to keep them happy. And if they don't like Guernsey, that's their problem.

Hey, what do they know about insurance anyway?