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How does a Gibraltar insurance company insure a risk in another EU state ?A company wishing to set up a branch in an EEA state, or to provide insurance services there, has to notify the Commissioner of Insurance for Gibraltar and provide him with certain information (including a full business plan in the case of a branch operation). Once he has considered the application, the Commissioner will notify the company, within certain well defined time limits, that it may (assuming the Commissioner approves the application) start business in the EEA state. Clearly local insurance legislation in the EEA state in question (such as policy language, premium taxes etc.) has to be complied with.
What is the minimum share capital for an insurer?No minimum share capital is specified in the legislation although by way of example a company carrying out general liability insurance will at the outset require a Minimum Guarantee Fund (and by implication therefore a minimum initial paid-up share capital) of €3,200,000; a company writing property damage insurance will require a lower MGF of €2,200,000. Financial resources available to the company in the early years is an important factor examined by the Commissioner of Insurance when considering a licence application, and a company would normally need to demonstrate that it can comfortably meet the solvency requirements at all times.
What about Spain's claims to sovereignty over Gibraltar?Under the terms of the Peace of Utrecht 1713, and the 1969 Constitution of Gibraltar, the guarantee given to the Gibraltarian people is that they will only become Spanish subjects if they freely and democratically express their desire to do so, which they are highly unlikely to do at any time in the foreseeable future. Successive British Governments have affirmed the 1969 Constitution, and rejected Spain's continual demands for restitution of the territory of Gibraltar. In December 2006, the revised Constitution of Gibraltar came into effect, and this also reiterated in its preamble the affirmation that “Her Majesty’s Government will never enter into arrangements under which the people of Gibraltar would pass under the sovereignty of another state against their freely and democratically expressed wishes”. In 2006 also, the historic Cordoba Agreement was signed, which did not in any way change the Spanish, British and Gibraltar Governments’ stated positions on sovereignty, but did establish a framework for all three parties to work together on practical issues. Gibraltar therefore has legal and political
reasons in terms of its relationship with Britain and with Spain to be
considered a politically entirely stable domicile .
How will Gibraltar's Financial Services Commission standards of regulation compare with other European regulatory bodies such as the FSA?Firstly it should be noted that the "FSC" is a statutory body corporate, formed under the Financial Services Commission Act 1989. It consists of seven members and a Chief Executive and Chairman, who is the Financial Services Commissioner. c Its regulatory activities are independent of the UK FSA, although the latter body was charged to carry out an audit prior to the FSC first being recognised as a competent authority within Europe by HM Government, and regular assessments and statutory reviews have been carried out by different international bodies, who have been satisfied with Gibraltar’s regulatory standards. Details can be found on the FSC website at www.fsc.gi under the tab “Evaluations”. The FSC applies UK regulatory standards, as it is required
to do under the FSC Act 1989, and indeed as it must do to continue to
be considered a competent authority within Europe. Nevertheless, its scale
of operations enables a speedy and reasoned approach to all applications
from insurers and reinsurers, provided that is entirely consistent with
credible regulation.
What about money-laundering?Gibraltar has put in place the most comprehensive legal framework and the most rigorous regulatory system in the EU with regard to money-laundering. Local legislation has been regularly enacted culminating in the Criminal Justice Act 1995. Gibraltar has transposed and given effect to the EU’s 1st and 2nd Money Laundering Directives and is already largely compliant with the provisions of the proposed 3rd Directive. Gibraltar is also largely compliant with the recently revised 40+9 special recommendations of the Financial Action Task Force (FATF/GAFI) and is actively working to update those few areas where international standards have recently changed Gibraltar’s application of the various measures
was strengthened and facilitated by the establishment in 1996 of the Gibraltar
Financial Intelligence Unit (GFIU), a joint venture between the Royal
Gibraltar Police and the Gibraltar Customs Service. The GFIU acts as a
reporting point for incidences of suspected money-laundering, and maintains
a close working relationship with the Financial Services Commission, who
also ensures compliance with money-laundering legislation as part of its
regulatory procedures.
What sort of insurance organisations should be looking at Gibraltar?Companies most likely to be interested in using Gibraltar as a European base will include:
What professional infrastructure exists in Gibraltar?As Gibraltar has been an offshore financial centre for many years the infrastructure in terms of professional services is of a high standard. Captive and other insurance companies already exist and therefore Gibraltar is not a green-field environment, and over recent years the development of the insurance market has led to the establishment of a professional insurance workforce covering a range of disciplines. Insurance capital in Gibraltar companies is approaching £1 billion. There are number of legal firms on the Rock, including
several with worldwide connections. There are now some 18 banks in Gibraltar, including well known international names, providing onshore and offshore services many using the Swift or CHAPS system to ensure the rapid transfer of funds. Bank deposits are now around £3 billion and the Banking Act reflects the requirements of the E.U. Banking Directives in licensing and control requirements. The legal system in Gibraltar is based on English Common
law and Statute laws and local Ordinances. The unit of currency is the
pound sterling although there is local currency which is at par with sterling.
There are no exchange control restrictions and as such there is complete
freedom to remit funds into or out of Gibraltar and to convert funds into
other currencies.
What are solvency margin requirements?The Gibraltar Regulator will base his solvency requirements for new or existing companies on the European minima i.e. 18%/16% of Gross Written Premiums (including uplifts for liability classes), proportionately reduced according to likely reinsurance recoveries on claims incurred. After three years the claims basis is applied (26%/23% of three year average claims), the required solvency margin being the greater result of the two calculations..
What are the attractions of Gibraltar?
For further information,
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