Labuan IBFC’s captive sector sees exponential growth

This is despite the movement restrictions implemented nationwide during the Covid-19 pandemic

by S BIRRUNTHA / Pic source from

The Labuan International Business and Financial Centre Inc Sdn Bhd’s (Labuan IBFC) captive sector experienced exponential growth with premiums growing at 7.9% per year.

Its executive chairman Datuk Iskandar Mohd Nuli said this was despite the movement restrictions implemented in the country while battling the Covid-19 pandemic.

He also described that 2021 marked another good year for the Labuan captive market.

“The number of captives has multiplied with an annual growth of 4.9% since 2010, while riding on the back of higher premiums against market-hardening effects.

“We also observed that international captive players have contributed to more than 65% of the total captive premiums.

“This is clearly noteworthy considering the challenges we faced in the last two years or so,” he said during the Asian Captive Conference 2022 in Kuala Lumpur today.

Iskandar noted that the growth augurs well with Labuan IBFC’s prominence as the preferred captive market among industry players, regionally as well as globally.

He said despite challenges due to the Covid-19 pandemic, the captive market has remained resilient throughout and continued achieving commendable results.

“Due to an increased international regulatory requirement and the hardening insurance market, we have experienced a rise in demand for Labuan captives as we are ideally placed to be a cost efficient, substance-enabling jurisdiction from which Asian captives are able to operate seamlessly,” he said.

Meanwhile, Iskandar also highlighted that Labuan IBFC is currently the only jurisdiction in Asia that offers protected cell companies (PCCs).

“The PCC structure is a cost-efficient vehicle for self-insurance and provides an alternative risk management framework.  

“Hence, in the last six months, we have seen a rise in the number of PCCs being established in Labuan,” he added.

He also noted that sectors such as banking, digital financial services and wealth management continued to record strong growth, affirming Labuan IBFC’s position as the premier regional international business and financial centre.

Looking ahead, Iskandar said he remains optimistic and confident that Labuan IBFC will be able to soar to greater heights with more commendable achievements despite these times of change and uncertainty.

He said to further reinforce Labuan IBFC’s position as the leading business and financial centre in the Asia Pacific region, Labuan Financial Services Authority had recently launched the Labuan IBFC Strategic Roadmap 2022-2026.

“The next five years will be crucial. As such, the strategic plan has been consciously designed to spotlight Labuan’s key focus areas, featuring vital propositions that aim to chart the path for the development of Labuan as a self-insurance hub.

“New risk categories are expected to be included in the captive segment, such as cyber cover and other more esoteric risks, which are viewed as timely and viable segments to invest in, while capitalising on having access to Labuan’s large regional reinsurance market,” he said.

Additionally, Iskandar also said the roadmap highlights Labuan IBFC’s commitment to sustainability and environmental, social and governance (ESG).

He noted that captives are poised to play a key role in this sphere as they are well-positioned to identify, implement and establish an ESG framework, document the company’s ESG issues and address them accordingly.

He added that this framework will enable captives to assist parent companies understand their overall risk profile and mitigate risks on the ESG spectrum to reduce the probability or severity of potential claims, thus reducing the company’s total cost of risks.  

“In a nutshell, embracing sustainability will allow captives to elevate their profile, inform stakeholders on the role of captives and offer the sector a refreshed relevancy in the long term,” he said.