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The Shape of Gibraltar’s Insurance Market 2007 The opening months of 2007 see Gibraltar as a developed insurance domicile that has come a long way since it acceded to the Single European Market for insurance in 1997. Latest available statistics show 55 insurance companies licensed in Gibraltar with premiums in excess of £1bn sterling and assets in excess of £2bn (source: Gibraltar Financial Services Commission). The motor market alone accounts for almost £700m sterling of premiums, almost as big as the Lloyds motor market in the UK (source: Deloitte). Three insurance Protected Cell Companies are incorporated in Gibraltar, actively using this concept which was introduced by the Protected Cell Companies Act 2001. Gibraltar has positioned itself not only as an important domicile for captive insurance companies but also for writers of mass business seeking to passport into Europe from a base which offers flexible but credible regulation, low tax, relatively low costs and a stable infrastructure. Gibraltar is set to develop even further as a major insurance domicile and a range of professional services are available to persons wishing to set up a company there. Insurance Managers, possibly the most important service provider for a Gibraltar insurer, at least at the outset of its operations, are broadly divided into the Big Three and the Independents – which a potential insurance company investor chooses will depend on their corporate ethic and how they wish to be managed. Those with a major broker connection may be attracted by a manager linked to their broker, or indeed they may feel they wish to divide the two functions and use an independent. Smaller companies may equally feel more comfortable with an independent, or may wish to tap into the undoubted broad resources the major financial groups offer. Big Three:
Independents:
The manager will provide all the basic operational functions, including accounting, underwriting where appropriate, company secretarial, liaison with regulators, regulatory returns, provision of directors (though independent non-executive directors can also be desirable – some managers have the policy of not providing directors to avoid any potential conflicts of interest). Lawyers are important service providers particularly at the company’s beginnings when structuring and opinions on issues such as Freedom of Services versus Establishment are key to the setting-up and licensing process. Insurance managers can provide simple company secretarial services, however some companies may prefer to have these handled separately, and for complex corporate transactions, for example mergers and acquisitions, structure changes etc. using an independent lawyer is preferable. There are many legal firms in Gibraltar, big and small, but the principal players are:
Some firms specialise in insurance matters more than others, but it is never harmful to meet more than one and gauge their relative merits. Accountants would in most cases provide an audit service complimentary to the managers accounting function, although depending on the company’s requirements there may be some logic in contracting separate independent accounting services. This may of course preclude the accountant chosen from then conducting audit. Again, there are a number of accountants in Gibraltar, and the principal firms carrying out insurance work include:
Insurers will often choose auditors based on their current worldwide arrangements. Banks will provide cash management and investment services for insurers, and several have specifically focused on the need for investments to be geared to the Valuation of Assets Regulations, which lay down various counterparty limits restricting investments in different kinds of assets. The principal commercial banks are:
For regulatory purposes funds need to be in the EU and not necessarily in Gibraltar, however it is practical to maintain some if not all banking arrangements in Gibraltar. Consultancy services are important in terms of general structure of the company, as well as conducting the licence application process with the regulator and selecting service providers. All of the insurance managers can provide these services, but there is also one wholly independent consultant specialising in the insurance field, Canon Consultancy, trading name for Chris Johnson. Canon focuses on transparency and impartiality in its dealings, allied to its principal’s long and varied experience in the insurance industry in the UK and Gibraltar. A specialised independent consultant can assist in the initial stages of an insurer’s set-up as well as offering ongoing services such as underwriting or marketing consultancy, as well as non-executive directorships. In conclusion... With the growth of a professional insurance workforce, a strong and user-friendly regulatory framework, and the reputation the domicile is achieving, Gibraltar looks set to continue its steady pace of development into the middle of the 21st Century. For
further information, please contact:
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