Guernsey's position as one of the leading captive insurance
domiciles globally has been reinforced by the results of a new
study into the sector.
Trade magazine Strategic Risk has carried out a
practitioner survey and published the results in a special
supplement which accompanies the September 2011 issue.
The results show that more respondents have their captives in
Guernsey than any other domicile; captive owners who use Guernsey
recognise the Island's expertise in the sector, its strong
links to London and the pragmatic attitude of the regulator, the Guernsey Financial Services Commission
(GFSC); and Guernsey's decision not to currently seek
equivalence with Solvency II has the backing of owners with
captives in the Island.
Peter Niven, Chief Executive of Guernsey Finance – the
promotional agency for the Island's finance industry
internationally, said: "The results of this survey are very
positive for Guernsey. We regularly see tables which show Guernsey
as the largest captive insurance centre in Europe and number four
globally in terms of the amount of business in the Island but this
goes further by seeking qualitative material which answers the
question 'why?'. What we can see is that captive owners
recognise Guernsey's experience and expertise, the convenience
of our close proximity and good links with the City of London and
that the GFSC has built a reputation for a robust yet pragmatic
approach to regulation."
Mr Niven said it was interesting to note that captive owners
regarded the regulatory environment as the most important
consideration in selecting a captive domicile, followed jointly by
tax and reputation of domicile. For captive managers, tax was most
important, then regulatory environment followed by reputation of
Mr Niven added: "It is often perceived that captive
insurance is simply a mechanism employed by large organisations to
limit their tax liability. However, this research shows that
particularly the captive owners themselves view tax as only one
part of the overall decision making process.
"In fact, captives are established for a variety of
reasons, including the ability to insure risks that would not be
covered conventionally, direct access to reinsurance markets,
greater control of premium and providing an internal focus on risk
"As such, we can see that domicile reputation and the
regulatory environment are also key considerations to location
choice and therefore it is not surprising that Solvency II is
potentially a key issue which could influence domiciliation or
re-domiciliation. I am glad to say this research shows that captive
owners using Guernsey are very much supportive of our decision not
to currently seek equivalence with Solvency II."
Strategic Risk carried out online research with 107
individuals. Of those, 55% were captive owners, 12% were risk
managers who may consider a captive in the future and 33% were
captive managers. Geographically, 49% were based in Europe, 36% in
the UK and 15% in the rest of the world. More respondents had their
captive in Guernsey than any other domicile. This was 24%, next
highest was 'other' on 22%, followed by Bermuda 14%,
Ireland 12% and Luxembourg 10%.
In-depth telephone interviews were also carried out with four
senior risk managers from global firms. The survey results show
that respondents using Guernsey are "impressed by the quality
of local management available, familiarity, proximity to London and
the pragmatic/helpful attitude of the regulator."
The document also includes a section called 'Guernsey
merits' and quotes one owner explaining the reasons for
choosing Guernsey as the captive's location: "Guernsey was
familiar to us and we had a history there which made the move to
establish a new captive quicker, easier and relatively inexpensive,
which is why we chose that domain."
This was echoed by another respondent who remarked: "[We
are] currently in Guernsey due to start-up cost and speed. Speed
was the main thing. We like Guernsey because of their pragmatic
approach and they are commercial, they do listen and they try to
understand on a business by business sense – they
don't just take a holistic approach."
Guernsey's decision not to currently seek equivalence with
Solvency II has been viewed positively, as one manager with clients
in Guernsey explained: "The majority of our Guernsey-based
captives are very happy Guernsey has decided not to seek
equivalence at this time."
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