The UK announced recently that following consultation it was ‘committed to establishing a genuinely competitive, bespoke captive insurance framework’ and this is being worked on by the Prudential Regulation Authority and Financial Conduct Authority with the aim of completing it next year.
The Guernsey International Insurance Association’s deputy chairman Jody Bisson said that while there was always going to be potential for business to be taken away from the island, the Guernsey International Insurance Association actually welcomed the move. He said that the island’s long history in the sector should continue to serve it well.
‘The way that we see it is that captives is still seen as a very, very niche market and outside of Guernsey there aren’t a huge amount of people who particularly understand captive insurance and how it supports businesses,’ he said.
The island set up its first captive insurance business more than 100 years ago. As well as 250 directly-employed staff, the industry also works with lawyers, banks, auditors and others.
Now that the UK government is saying that captives are a good thing, that would be likely to reflect well on Guernsey, Mr Bisson said.
‘Would you want to go into an untested regime? Guernsey has got 100 years of history and we’ve got tried and tested regulations,’ he said.
‘We’ve got lawyers who understand, we’ve got banking systems that understand, and regulator that understands.
‘Guernsey can provide expertise, stability and security. What better hallmark for our captive insurance industry?’
Many States in the USA introduced captive insurance regimes several years ago, but the main beneficiaries have ended up being the established captive regimes in Cayman, Bermuda and Vermont, and Mr Bisson said the feeling was that the UK’s change would have a similar impact on Guernsey.
As a result of the UK consultation, the UK will also be looking at broadening the range of firms who might benefit from captive insurance arrangements, including smaller companies that might not have the means, or might not wish to establish a standalone captive insurer but might do so through a protected cell company, a concept pioneered locally.
‘Guernsey was the birthplace of the protected cell company,’ Mr Bisson said, adding that the idea had now been replicated by many jurisdictions around the world and showed the island’s ability to innovate and develop.
‘We’re not the only jurisdiction offering captive insurance. France and Italy have introduced it now, and you’ve got all the other offshore international centres throughout Europe that provide this as well.
‘But we’ve maintained our position at the forefront, and we’ll continue to do everything we can to stay there.’
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