On his return from the annual insurance industry event in Monte Carlo, Les Rendez-Vous de Septembre, Guernsey Finance Chief Executive Dominic Wheatley ponders Guernsey's role in the global insurance and, particularly, the reinsurance market.
Substance in the insurance industry is a subject close to my heart. After all, it is what brought me from London to Guernsey nearly 25 years ago. And the Rendez-Vous in Monte Carlo does give me the opportunity to catch up with some very old friends.
When I first visited the event for Guernsey, I ran into people I had not seen for 25 years – but I also felt strangely at home.
Our insurance industry has come a long way since its beginnings as a captive centre more than 50 years ago. While we remain a major global player, and Europe's undisputed number one captive centre, our industry has developed to also cover insurance-linked securities (ILS), specialist lines, MGAs, collective commercial risks, and finsure. We have significant players and key market positions in many areas, and an insurance community of some 1,000 people.
Reinsurance is a relatively recent development for us, but has grown significantly in recent years and we now have a unique and distinctive offering, based on the collateralised model.
We have the expertise, experience and substance to deliver pioneering and innovative services and structures for alternative risk transfer, and all the advantages of our close proximity and relationships with the City.
Our responsive regulatory regime, outside the EU, is quicker, less prescriptive and more flexible than Solvency II, and has been commended in a supervisory report from the International Association of Insurance Supervisors (IAIS) for fully observing international standards.
This year we have been very clearly stating how Guernsey reinsurance works for EU-domiciled insurers, providing funds with capital calculations under Solvency II. Misunderstanding over this issue is quite common, and it has constrained the development of our sector.
Credit will be granted for reinsurance in firms' capital calculation for European-domiciled insurers who have bought from a non-equivalent regime (third country), such as Guernsey, if the entity is rated triple-B or above, or is collateralised. So there is no reason why an EU-domiciled insurance company should not be able to benefit from reinsurance from a non-equivalent domicile – that is, one operating in Guernsey.
This year we've also been able to tell the world that the European Union has recognised our corporate and personal tax regimes as being cooperative and transparent, and that our finance industry, from insurance to investment funds and private wealth, has proper economic substance.
As I mentioned earlier, Guernsey has been developing its substance for more than 25 years, but it is worth noting that many other offshore insurance centres failed the same tests.
Reputationally, financially and operationally, Guernsey's insurance mix of substance and experience just works.
For more information about Guernsey's finance industry please visit www.weareguernsey.com.
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.