Guernsey: Guernsey’s Insurance Independence

Last Updated: 25 February 2011
Article by Dominic Wheatley

Most Read Contributor in Guernsey, November 2017

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.

In association with
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
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

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