Fiona Le Poidevin, Chief Executive of Guernsey Finance,
explains why Guernsey is the European leader for captive
A location where you'll find expertise and experience.
Recent data suggests that the developed global economies are
recovering from the financial downturn and the UK is making much
quicker progress than many other comparable centres.
However, I am sure that despite this upturn in prospects many
business leaders will be keen to take advantage of the cost savings
and risk management efficiencies afforded by captive insurance. If
you do then it is worth considering that a very important factor in
establishing a captive is the choice of domicile.
Guernsey's first captive insurance company was established
in 1922 and this heritage has helped the Island grow significant
experience and expertise. Today, the Island plays host to leading
global captive insurance managers such as Aon, Jardine Lloyd
Thompson, Marsh and Willis as well as independent, boutique
operators such as Alternative Risk Management (ARM), Hepburns
Insurance, Kane and Robus.
The number of international insurance entities managed by
providers in Guernsey has risen by 99 in the 12 months to the end
of March this year, taking the total number domiciled in the Island
to 790. Indeed, the Island is the largest captive insurance
domicile in Europe and number four in the world.
Guernsey's status as a British Crown Dependency which is
English speaking, uses the British pound Sterling and is in close
proximity to and within the same time zone as the rest of the
British Isles has helped attract a large number of captives from
parent companies based in the UK.
Our client base includes some 40% of the FTSE 100 companies
which have a captive such as BP, BHP Billiton and Tesco as well as
UK Government owned entities such as Network Rail and Transport for
London. The Island's location between the UK and France also
means that it has attracted captives from parent companies based
around Europe. However, international insurance business in
Guernsey is also increasingly coming from much further afield.
A major attraction of Guernsey in more recent years has been the
Island's early commitment not to seek equivalence with Solvency
II. Guernsey is in Europe geographically but it is not in the EU
and therefore adoption of EU Directives is on a voluntary basis.
The Island has decided that seeking equivalence to Solvency II
would not be in the interests of our captive insurance sector but
instead we will continue to meet the standards of the International
Association of Insurance Supervisors (IAIS). This provides a stable
and proportionate regulatory environment for captive insurance in
The Island is also considered an innovator in insurance
legislation. Guernsey pioneered the cell company concept when it
introduced the Protected Cell Company (PCC) in 1997. Until then,
captives had been the preserve of larger organisations but the
innovation enabled small and medium sized enterprises to
'rent' a cell of a PCC and thereby take advantage of the
captive concept without the associated costs of establishing their
own fully-fledged insurance company.
Indeed, a growing number of new captive formations are coming
from the SME market according to the Marsh captive benchmarking
report for 2014. It also recognises that captives are not formed
for tax purposes but for their value as a risk management tool.
There are many benefits to having a captive and we believe that
they are optimised by choosing Guernsey as the domicile.
An original version of this article was published in the
Telegraph's Risk and Fraud Report, August
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