Guernsey Introduces Fast-Track Preauthorization for Captive Cells

The Guernsey Financial Services Commission (GFSC) has introduced a pilot "fast-track" preauthorization for captive insurance cells that's already been put into use.

The move, made in consultation with the Guernsey insurance industry and the Guernsey International Insurance Association (GIIA), offers a preauthorization plan that permits just-in-time creation of new captive cells in existing protected cell companies. The pilot program is expected to run until the end of 2021.

Artex in Guernsey used the pilot program to implement a captive cell solution within 48 hours.

"We are happy to work with industry on this type of initiative in instances where it can be done without endangering policyholder protections," the GFSC said in a statement.

GIIA Chairman Mike Johns said the pilot program would give managers a route to act quickly and avoid missed opportunities to assist clients with urgent issues.

"This flexible approach to regulation enables brokers and their clients to react to adverse market developments right up until the renewal date," Mr. Johns said in the statement. "This will be an invaluable tool to enable buyers to increase their control over difficult renewals during the current hard market cycle. Guernsey's proactive approach to cell formation works."

The preauthorization plan applies to insurance-licensed protected cell companies (PCCs) owned by an insurance manager and is available for captive cells writing a single line of general insurance business to meet an urgent business need. It must meet Guernsey's standard formula minimum capital requirement and prescribed capital requirement, with no regulatory adjustments available.

"Guernsey is already a global leader in the captives market and now offers the ability to set up and start writing insurance in as little as 48 hours on a preauthorized basis, provided the documentation complying with the regime is provided to the Guernsey regulator within 14 days of commencement of business," Ken Storey, who is a partner at the Walkers law firm in Guernsey and was involved in the preauthorization pilot program, said in the statement.