Gibraltar is within the European Union (EU) and has fully implemented the 2nd and 3rd EU directives on insurance. It is therefore possible for Gibraltar established insurance companies to cover risks in any EU Member State. The Insurance Companies Ordinance 1987 allows for the setting up of Gibraltar insurance companies, both third party insurers and captive insurers, and also the licensing of foreign insurance companies wishing to carry on business in Gibraltar. Insurance business is supervised by the Gibraltar Financial Services Commissioner (the Commissioner), supported by the Insurance Supervisor, to UK Standards.
Advantages of a Gibraltar Insurance Company
Gibraltar insurers are able to cover risks in any EU member state as a result of:
- Gibraltar being within the EU and implementing the EU insurance directives
- Favourable establishment and operating costs
- Use of Gibraltar Tax Exempt and Qualifying companies to reduce corporate taxes
- Local insurance, legal, accountancy and banking expertise
- No insurance premium tax in Gibraltar
Captive Insurance Companies
These are limited purpose insurance companies specifically for financing risk emanating from its parent group or groups, occasionally extending to customers of the parent. Typical types of risk are:
- Property damage
- Employers liability
- Public and products liability
- Professional indemnity
- Employee benefits
- Medical aid expenses
NB. The captive’s exposure may be limited by use of reinsurance.
Why form a Gibraltar Captive Insurance Company?
- Conventional insurance may not meet the needs of major corporations in terms of price, service, cover and capacity
- Able to gain access to the reinsurance market. Reinsurers operate at lower expense ratios and offer better value for money.
- Able to underwrite business on a direct basis. Some other EU jurisdictions only allow reinsurance captives.
- Gibraltar is outside the EU Customs Union and therefore a VAT free zone.
The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.