Across the insurance industry there has been one issue in
particular which has received more attention than any other in the
last couple of years – Solvency II.
The EU's proposed regulatory regime for insurance and
reinsurance business has been heavily debated and its introduction
much anticipated. Solvency II was due to come into effect from 1
January 2013 but we are hearing is that this is now very likely to
be delayed by a year to 1 January 2014. The uncertainty surrounding
its introduction and also the implications in practice is causing
some angst around Europe.
However, in Guernsey, we have opted for certainty. The Island is
not part of the EU so we are not required to adopt Solvency II and
our Government and the financial services regulator have issued a
joint statement to say that currently the Island doesn't have
any plans to seek equivalence under Solvency II.
Solvency II has been designed to address systemic and group
risks within commercial insurance markets but these are risks not
generally faced by Guernsey-based international insurance
companies, where there are a large proportion of captive insurance
companies. Under the current proposals, Solvency II is set to
impose a blanket set of capital requirements and therefore
equivalence would burden Guernsey insurers with additional costs
and render currently effective captive business plans
Bermuda and Switzerland are adopting a different stance. They
are in the first wave of equivalence applications but both are
doing so primarily not for their captives but to protect their
international commercial reinsurance industries. However, it
appears they will be seeking to mitigate the effects on their
captive insurance business and so we will be monitoring
Making an announcement that we have no current plans to seek
equivalence not only provides certainty to our clients and
potential clients but ensures that we will be able to continue to
offer a different set of products and services. Guernsey will
continue to meet the standards of the International Association of
Insurance Supervisors (IAIS) – the IMF has commended the
Island for having high levels of compliance with the 28 insurance
core principles of the IAIS – but its proportionality
principles mean that we will provide a more attractive environment
for captive owners and other niche insurers.
There has already been a very positive response from clients and
potential clients. Indeed, our proposition may prove attractive for
captive owners and their insurance vehicles currently based within
EU domiciles, such as Dublin and Luxembourg – our two
major competitors in Europe, and especially where they are writing
business outside the EU. Certainly local managers are reporting an
upswing in inquiries and this bodes well for further extending our
leading position as the largest captive insurance domicile in
Europe and the fourth largest globally. This strength is
illustrated by the fact that 40% of the FTSE 100 companies with
captives have them domiciled in Guernsey.
The Island continues to see a steady flow of new business and in
particular through the use of cell companies, despite the maturity
of our sector and the continuing hard market conditions. Now there
are 678 international insurance entities in Guernsey, comprising
344 international insurers (pure captives, PCCs, ICCs and ICC
cells) and 334 PCC cells with total gross assets of £23.4bn,
a net worth of £8.1bn and premium written of
In 2010, 70% of all new licence applications were from UK parent
companies. The UK is clearly the largest single source of business
however Guernsey is a truly international insurance centre with the
spread of new business from Europe (Switzerland and Germany),
Africa (South Africa), the US and the Asian markets (Japan and
Notable new business this year has included our captive
insurance sector becoming home to the City of London
Corporation's newly formed reinsurance company, City Re Limited
and Swiss ILS managers Solidum Partners AG have used a Guernsey
based incorporated cell structure, Solidum Re as a private
transformer of catastrophe risks into $12.4m of securities.
This highlights the increasingly diverse business coming to
Guernsey's sophisticated insurance sector. Our long-standing
risk management heritage has grown an industry comprising a wide
range of managers, from global names to local independent players,
supported by the full range of professional services that together
have significant experience, expertise and innovation in providing
cutting edge insurance solutions to a worldwide client base.
In this publication, we address how Dubai is leading the way in the application of technology to its healthcare insurance system and how the health insurance law is developing around these initiatives.
The European Insurance and Occupational Pensions Authority published a consultation paper on Implementing Technical Standards on the standardisation of the presentation of the insurance Product Information Document.
The MFSA issued a consultation document proposing the introduction of external auditing requirements for certain quantitative reporting templates that will form part of the Solvency Financial Condition Report.
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