Barbados - the ‘forgotten’ domicile

Gary Osborne, president, USA Risk Group 02/02/2010

I recently spent a week in our Barbados office and found myself wondering why this jewel has become almost the ‘forgotten’ Caribbean option.

I arrived at the airport and was immediately struck by the facility as being the best I have experienced in the islands outside of Puerto Rico. The custom lines move quickly, there are several baggage areas, there are rental cars and taxis available and security seems to be taken seriously.

You head over to the West Coast and there are probably twenty to thirty hotel choices ranging from very basic to ultraluxe and, at night, there are literally dozens of high-end restaurants. At dinner one night we found ourselves two tables over from Andrew Lloyd Webber; Barbados is clearly the playground for the British jet set.

I would also note that the addition of Jet Blue to the flight options for Barbados has lowered the flight costs and gives relatively easy access from the East Coast of the United States. I recently traveled to Cayman from Vermont and that took two stops and ten hours. My trip home from Barbados had one stop and took eight hours; the perception of its southerly position being a problem is being addressed by its addition of more direct flights.

Now all of this is nice but doesn't get to the most important details to a potential captive owner: the availability of service providers, cost structure and the quality of regulation.

Addressing regulation first, Barbados is almost unique amongst the main Caribbean domiciles in that it is an independent nation and has a forty-year-plus history of political stability as well as a stellar track record as a financial centre that saw it almost immediately named on the OECD white list.

Moving onto costs and service providers it is here that Barbados has a clear advantage over the other islands and one that has not been promoted effectively yet. Our office has seven staff and only one staff member is on a work permit. This difference has two immediate benefits to the captive industry; cost and stability.

Bermuda and Cayman are excellent domiciles but there is little way around the staff turnover issue, as there just are not enough qualified locals to fill all the needed posts. With the seven-year work permit window, staff turnover is likely to remain a constant thorn in the side of captive managers.

In Barbados, which has one of the best education systems in the Caribbean, there are qualified locals ready to work in this industry and, just by eliminating the work permit fees, there is a major cost benefit. Indeed, the costs compare favourably even with domestic domiciles as the cost of health insurance is a fraction of what it is in the USA.

So why is Barbados forgotten? My own feeling is that it is nobody's headquarters; the marketing arms of the insurance managers are based elsewhere and it is definitely a second option to most of the managers unless the prospect is Canadian - when enough of the "Barbados has good options for Canada" message has stuck.

We have now been in Barbados for approximately two years and I can, for one, say, it is no longer a forgotten option for our group