Guernsey: Guernsey Issues SPI Rules

Last Updated: 28 February 2017
Article by Mark Helyar

Most Read Contributor in Guernsey, November 2018

Guernsey has new rules for special purpose insurers. Mark Helyar, the lawyer and director who drafted the rules together with the Guernsey International Insurance Association, comments on this development and contrasts it with competition from other domiciles.

Guernsey's new rules for special purpose insurers (SPI) were issued by the Guernsey Financial Services Commission on January 1, signalling Guernsey's intention to remain at the forefront of growth in the insurance-linked securities (ILS) sector in 2017.

The first thing to note about Guernsey's ILS sector is that it has reached a substantial size without the need for SPI rules. Effectively the rules codify the discretions already applied by Guernsey's regulator under existing legislation which has been in existence since 2002.

Comparing Guernsey's approach to, for example, Bermuda's, has been difficult because of the lack of transparent, independent guidance about how ILS works and is licensed and regulated. This has been an area which competitors are keen to highlight to potential clients because it has enabled them to imply a lack of certainty, which is not a true reflection of the regulatory approach in Guernsey. Those 'in the know' were already familiar with the content, but now it is available to all.

The rules are designed to be focused squarely at the key commercial questions which arise for organisations and funds which look to structure or invest in ILS, namely;

  • How much capital do I need? - none
  • What can I use as collateral? - generally cash and category 1 LOC's, other assets on a discretionary basis
  • How much will it cost? - set out (and reducing for cells as a result of recent consultation)
  • How quickly can I move to close deals? - very quickly indeed
  • Can I have pre-approved deals? - yes

As well as this there is comprehensive guidance on other important issues such as;

  • Can I dividend / redeem and distribute capital and profits without procedural complexity? - yes
  • How easy is it to talk to the regulator? - there is a short chain of command and a supportive, open regulatory environment

The new rules and guidance have also given rise to some other amendments – an SPI insurer is now formally recognised as a category 6 insurer for Guernsey regulatory purposes, which negates the need for certain regulatory requirements applicable to other types of insurer such as minimum capitalisation and returns in relation to solvency assessment. This approach properly reflects the risks associated with SPI vehicles, where typically 100% of the possible loss associated with underwriting a reinsurance contract is held in a trust account independent of the SPI vehicle.

This places Guernsey at least on the same footing as Bermuda in the European time zone for ILS transactions. Other places such as Gibraltar have issued guidance but there is no business traction.

There has been much recent commentary of onshore ILS in London, there are a number of key strategic and commercial factors which mitigate against this becoming a reality – the first is that the FCA has long chains of command and control and cannot hope to meet a three-day turnaround or less. Most ILS deals are compressed into very short periods around renewal and need to be conducted in hours rather than months.

Could this be achieved onshore? Well, nothing is impossible but there is a significant regulatory risk factor for London which is being ignored. The truth which dare not speak its name is that offshore jurisdictions providing administration services, such as Guernsey, are better regulated and have been for more than a decade. ILS structures ideally need independent organisations to run and administer them. This type of professional service industry is the bread-and-butter of the offshore world.

In Guernsey, as in Bermuda, insurance managers, fiduciary providers and directors are all licensed and directly regulated and for this reason their competence is well known to the regulators and responsibilities can be bestowed in the knowledge that regulatory sanctions, fines and disqualifications are readily available. The regulation of fiduciary and other service providers guarantees a high level of professionalism and competence and means that an offshore regulator which allows an insurance manager to assume responsibility is taking less risk than an onshore regulator where no such regulation exists. Would it be a sensible regulatory approach for the FCA to consider adding risk by rubber stamping short-term approvals for ILS structures managed by unregulated entities?    

Even if all of the other hurdles can be overcome onshore, given that Insurance Premium Tax (IPT) has doubled in 18 months and there is talk of it rising to 20%, what is the likelihood of a nascent ILS industry in London remaining tax free were it to become successful? There is a very long precedent for successful industries to be taxed.

Whatever the outcome, the possibilities are obviously still expanding. Guernsey is now even better placed to take advantage of ILS business in the European time zone.

Mark Helyar is an Advocate and 'Of Counsel' at Bedell Cristin in Guernsey.

An original version of this article was first published by Intelligent Insurer, January 2017.

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
Related Topics
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