The insurance industry in Gibraltar shows no sign of slowing down, with the Financial Services Commission, the local financial services regulator, having recently licensed its 62nd insurance company. The success of the insurance industry in Gibraltar came about after the enactment of the Third Life and Non-Life EU Directives in the mid 1990s, which allows insurance companies registered and licensed in Gibraltar to ‘passport’ or sell their products across the European Union on the basis of a single licence issued by the Home State regulator, in this case the Gibraltar Financial Services Commission.
Since then, many investors have recognised the benefits of setting up the headquarters of their European insurance business in Gibraltar. Many of the earlier insurers to set up were motor insurers, which exited the Lloyds market as costs increased. But as Gibraltar has cemented its reputation as a well regulated insurance domicile, other insurers have set up operations here, underwriting a diverse portfolio of risks.
Gibraltar is one of the few European domiciles to have Protected Cell Company (PCC) legislation, which enables investors to self-insure through a cell in a PCC, rather than having to set up a standalone insurance company. The advantage of this is that the investors do not have to put up the capital to set up a separate insurer, which nowadays is at least €3.2m. Instead, by operating through a cell, the investors will need to put up less capital, or even simply ‘rent’ it from a sponsoring company. The PCC legislation has not only benefited the insurance industry, as funds also being set up as PCCs.
Last week, the Gibraltar Insurance Association, the trade association for insurance companies in Gibraltar, held a lunch to launch the Gibraltar Insurance Institute (GII), the local branch of the Chartered Insurance Institute of the United Kingdom. The GII will help to promote insurance skills, as demand for insurance professionals increases in the coming years.
For more information on the benefits of setting up in Gibraltar contact christian.summerfield@bdo.gi.