Originally published in the Captive Review guide
'How to start a captive – Europe'
If you are thinking of setting up a captive vehicle there
are compelling reasons why you should consider domiciling it in
During the past decade the Island's international
insurance industry has seen sustained growth and this has
continued during 2007 and into 2008 despite our maturity,
increased competition and difficult market conditions.
Figures from the Guernsey Financial Services Commission
(GFSC) show the number of international insurance entities now
stands at more than 700, with 368 international insurers and
345 insurance cells. As part of this growth Guernsey has become
home to Gold Coast City Council Insurance Company Limited
– the world's first local authority
Guernsey has retained its place as the number one captive
insurance domicile in Europe and is fourth in the world in
terms of premium written. This continues to rise year on year
and is now US$7bn, which is double what it stood at 10 years
We have breadth and depth in our range of providers who
continue to see increasing diversity both in terms of the risks
being covered and the geographical origin of business. For
example, whilst 40% of the entities licensed in Guernsey during
2007 were established by UK parent companies, 30% of new
business last year was from the rest of Europe and 13% from the
USA. This is in addition to existing business that is spread
across the globe.
In 1997 Guernsey pioneered the Protected Cell Company (PCC),
which has also become known as the segregated cell company. The
Island has since also introduced the innovative Incorporated
Cell Company (ICC). There are now more than 70 PCCs established
in the Island and last year saw the jurisdiction's
first insurance-writing incorporated cells come on-stream.
The Island continues to highlight the potential benefits of
cell company vehicles and particularly how the structure
enhances the viability of self-insurance for small to medium
sized enterprises (SMEs).
Guernsey has also begun to market its captive heritage as a
key attraction for European reinsurance operations to establish
in the Island. This has coincided with Barbican Reinsurance
Company Limited becoming the first major commercial reinsurer
in the domicile.
In addition, as part of our promotion of financial products
and services in emerging markets, we have been working with
Chinese regulators to educate them on the captive concept and
showcase Guernsey's industry and regulatory
Mature yet modern
This year Guernsey has completed a thorough review and made
several changes to maintain our tradition of having mature yet
modern insurance legislation. Part of the changes regard
solvency requirements and effectively codify what is already
best practice among Guernsey's insurance managers
– the minimum solvency required continues to be set
out in the law but the board is required to make its own
assessment and submit it to the regulator.
As Guernsey is not part the EU it will not be subject to
Solvency II but its licensed insurers and reinsurers will be
impacted via inwards and outwards insurance activities. EU
based fronting insurers and reinsurers and their regulators
should recognise the sound regulatory framework in place in
Guernsey, particularly as the changes to the insurance law
build on the risk-based approach that has been one of the
Europe's No. 1
Hopefully I have shown that if you're
looking to establish a captive then Guernsey has a lot to offer
and would be an excellent choice of domicile.
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