Guernsey: Guernsey’s Insurance Independence

Last Updated: 25 February 2011
Article by Dominic Wheatley

Most Read Contributor in Guernsey, September 2018

Originally published in Post Europe, 11 February 2011

Guernsey recently made it quite clear it would not be seeking equivalence under Solvency II. Dominic Wheatley, immediate past Chairman of the Guernsey International Insurance Association (GIIA), examines why the authorities there felt the need to make this declaration and what it means for insurers and captives there.

The authorities in Guernsey have announced they have no plans to seek equivalence under Solvency II. The joint announcement was issued by the States of Guernsey Commerce & Employment Department and the Guernsey Financial Services Commission (GFSC) in January. ( See this release). It is straightforward and unambiguous but does nevertheless raise some questions.

Why was such an announcement necessary? After all not many authorities feel the need to issue statements of what they are not going to do. Other jurisdictions have not felt the need to make similar statements - aside obviously from those who do have plans to seek equivalence.

Ambiguous statements

The need arose out of previously ambiguous statements made in public addresses and in press articles in which GFSC executives implied a proactive interest in pursuing equivalence. This gave rise to press speculation and created uncertainty as to Guernsey's intentions. Clearly, owners of Guernsey insurance companies, both actual and prospective, need to know what the regulatory environment will be at least for the medium term. Uncertainty on such a key matter was hampering proper planning and stunting the development of the industry. Clarification of Guernsey's position was certainly needed.

So, why is this the right decision for Guernsey? The Guernsey International Insurance Association has long argued against equivalence for a number of reasons. Solvency II is designed to deal with systemic and group risks, risks not generally faced by Guernsey-based international insurance companies. Guernsey regulation is already robust and effective - insurance failures have been rarer there than all major economies and most other independent financial centres.

Equivalence would burden Guernsey insurers with unnecessary costs and render currently effective captive business plans uneconomic. There are no identifiable benefits of equivalence and existing business plans will remain effective under Solvency II, even those involving European risks. There are no significant new sources of business that will be attracted to the island by equivalence - indeed the opposite may prove to be the case.

Rigorous review

Guernsey has worked hard over the last 25 years since the enactment of its first insurance law to establish an extremely effective regulatory framework designed to respond to the demands of its business. This was rigorously reviewed by the International Monetary Fund last year and given a clean bill of health as compliant with acceptable international standards as determined by the International Association of Insurance Supervisors.

This has not happened by accident. As a founder member of the IAIS, Guernsey has always sought to adopt IAIS core principles within its regulatory regime However, it has done so intelligently, applying those principles carefully to meet the specific risk profile of the business being regulated and minimising the burden of unnecessary regulation applicable to meet risks not present within the local industry. Solvency II is highly prescriptive and, as currently drafted, does not respond to the particular regulatory challenges of the niche companies and limited business plans typical of Guernsey captives.

Strong boards

It should be noted that for the small number of companies for which Solvency II would provide an effective basis of regulation, there is no impediment to adopting those standards unilaterally - something that a number of them are considering or even actively pursuing. This might seem strange until one looks at the strong corporate governance culture in the industry. Strong boards will always look to adopt appropriate best practice even where not obliged to do so. That is just good business sense.

What are all the other points in the statement about? These are a reiteration of Guernsey's commitment to international acceptable standards and a confirmation that there will be no change to the stated policy without the agreement of the political and regulatory authorities and the local international insurance industry. This is important in satisfying Guernsey captive owners that this announcement secures Guernsey's position for the foreseeable future, enabling them to plan with confidence for the medium term. It further reassures them that they will be fully consulted before any plans could be made towards equivalence in the future.

Surprising involvement

Some people have expressed surprise at the involvement of C&E in what might appear to be a regulatory matter. However, the consideration of equivalence is far from being a straightforward regulatory decision. For a small independent finance centres such as Guernsey equivalence will involve the ceding of control of significant aspects of their regulatory regime to the EU and fundamentally affect their relationship with Europe.

In addition it is a substantive economic decision given the importance of the finance sector generally and the international insurance sector in particular to Guernsey's economy. Clearly it would be inappropriate in a democracy for matters of international relations and economic significance to be left to the independent regulatory authority. Such decisions require proper democratic accountability at the political level.

Difference stance

Some domiciles are adopting a different stance and two established captive domiciles are in the so-called first wave of equivalence applications: Bermuda and Switzerland. However, both are doing so primarily to protect their international commercial reinsurance industries, not for their captives. In each case they may be looking to mitigate the effect of additional regulatory burden involved through the exclusion of captives specifically or the application of so-called proportionality principles that the European Captive Insurance and Reinsurance Owners Association and others are looking to have included within Solvency II. The progress of all of this debate will be followed with great interest.

Business as usual

Guernsey, however, can get on with business secure in the knowledge that the regulatory environment is stable for the time being. This is in some contrast to those jurisdictions actively considering equivalence, the impact of which on their resident captives is very uncertain and potentially detrimental. It also raises questions about the position of those jurisdictions that have yet to clarify their intentions at all: on what basis can one assume that they are not going to pursue equivalence.

Now that Guernsey has affirmed its position on S2 equivalence, other domiciles will be under pressure to state theirs.

Dominic Wheatley is the immediate past Chairman of the Guernsey International Insurance Association (GIIA) and Managing Director of Willis Management (Guernsey) Limited, a Chartered Insurer specialising in the provision of management services to Guernsey-domiciled insurance companies.

For more information about Guernsey's finance industry please visit

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions