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Insurers bringing more and varied business to expand the market Licensee. Whilst it is recognised that stateGibraltar motor insurers' growth from UK premiums ments and documents produced for these purposes will generally be genuine, profesoutstripped that achieved by British-based competitors, sional skepticism should always be at the including the largest, Lloyds of London, in 2011 and are forefront of the Auditor’s mind.” Although the company failures were thought to have done so again last year “an unwelcome event,” Ashton told wo major international accountancy Irish Government for the discontinued Gibraltar International that the “interest reports published late in 2012, show insurance portfolio of the former Insurance shown from some quarters was disproporgross written premiums up by some Corporation of Ireland (ICI) that has been tionate, as it had no serious impact on the 60 per cent in 2011 to reach around in run-off mode for 26 years! Gibraltar insurance sector. £2.4bn, aided substantially by the inclusion EIFlow, represents a first in this type of “People in London tell me that in any for the first time of four new insurers – business for the territory and for Quest, mature insurance market, company failures Southern Rock, Enterprise, Calpe and whose managing director, Steve Quinn, is unfortunately can occur, and even within Preserve. looking to a second similar operation soon well-Regulated jurisdictions such as ours.” According to accountants Ernst & to be added from elsewhere in Europe, Anxious to “move on from those Young’s motor report, that prompted circumventing the present UK block. episodes” as one insurance insider Gibraltar’s share of the UK market to rise Quinn is also “very confident our new remarked, the GIA’s Johnson is “enthused 56 per cent in 2011. Since then there have initiatives will bear fruit in the next 12 with Government’s renewed commitment been other motor insurers opening on The months with at least three more insurance to raising Gibraltar’s positive profile in the Rock, including the most recent, a special- operations coming on board”. insurance arena.” ist chauffeur, limousine and private & The Rock’s 56 active licenced public hire vehicle insurer, Nelson, maninsurers employ some 375 people and aged locally by Willis. embrace all 18 classes of business to Still more insurance operations are provide an expertise found in very few being introduced to the territory, includother jurisdictions. In 2012, the sector is ing it is understood from trade media, one estimated to have written £3.5bn of backed by a group of well-established US gross premiums, with life and general investors in motor insurance known as St. insurance accounting for all but £0.5bn, Bernard Assurance. Once licenced by the which was in captives. Financial Services Commision, the new The last captive insurer opened in insurer progressively will offer policies Gibraltar five years ago and this is throughout Europe. an aspect Ashton feels offers a big Opening up the opportunity for The Michael Ashton, Gibraltar's finance centre’s insurance tzar, opportunity, as evidenced by his attenRock to handle UK insurance ‘run off’ discusses the way forward with Gibraltar Insurance dance as part of a government team at Association chairman, Chris Johnson. work is one of the issues that Michael London’s ‘Captive Live UK’ conference Ashton, the government’s new insurance The arrival of new insurers and types in February. marketing specialist, is expected to have of insurance business is welcome news after high on his list of fresh activity following three small Gibraltar-based insurance com- Captive advantage a March meeting with the Gibraltar panies – accounting for less than 1 per cent “Although the jurisdiction offers several Insurance Association (GIA) strategy group of general insurers, were last year removed advantages over other locations – including led by chairman Chris Johnson. from the Financial Services Commission no tax on premium investment income – (FSC) authorised list after they were some captives [insurers established with the Run-off ahead suspected of being capitalised by false or specific objective of insuring risks emanatGibraltar has long been prevented from invalid bonds from elsewhere in Europe. ing from their parent group or groups] may taking on British run-off work, known as That led to the FSC issuing a no-holds- be biding their time to see how the effects ‘Part 7 transfers’, through an unintentional barred instruction to see that auditors of the EU Solvency II requirements work omission from UK legislation that allows in particular, are applying appropriate out in practice when implemented next year,” explained Ashton. everywhere else within the EU and standards and procedures. “They have the option to say, set up in European Economic Area (EEA) to do so! The Regulatory body in February said: Yet that has not prevented Ocean “The FSC acknowledges that the primary Jersey or Guernsey where it is generally Village-based Quest, managing such busi- responsibility for the prevention and detec- cheaper and rely on any exceptional ness for a new insurance Gibraltar-licenced tion of fraud falls with those charged with arrangements those states may make with operation EIFlow, that paid €17m to the governance and management of the the European Commission, rather than
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take advantage of Gibraltar’s EU status with opportunity as of right for passporting business throughout Europe.”
New business goal Tasked in this first year with increasing awareness of The Rock’s insurance credentials, he found people “quite surprised at the size and scale of Gibraltar’s involvement with insurance and the opportunities presented in establishing Protected Cell Companies (PCCs),” Ashton enthused. The territory has five cell companies – the two largest being AON and Euroguard – and establishing an operation on The Rock “is certainly cheaper and quicker than in the UK and, I hear, than in Dublin too, said Ashton, who for 15 years worked on London’s Lloyds market. “Profile, however, is only a first step and the ultimate target has to be on new financial services businesses coming to Gibraltar,” as Gilbert Licudi, Minister with responsibility for Financial Services, noted after the February conference: Ian Clarke, a London partner specialising in insurance for accountants Deloitte, points out: “2012 motor insurance figures
are not available until mid-year, but the results will show a continued improvement last year for Gibraltar motor insurers, in part as a result of further premium rate increases.” The EU requirement from late last year to remove premium discrimination for young women over those for males will not show through until this year, but the impact will have been broadly flat, he said. However, legal reforms involving new personal injury factors, including the high incidence of whiplash claims, could affect motor insurers’ net premium income. Gibraltar motor insurers’ - Admiral is the largest with around 40 per cent share, followed by SAGA and Advantage (part of Hastings Group) - are also significantly more profitable than those in the UK and this also is expected to have improved marginally in 2012. But the requirement for motor insurers to maintain a higher level of capital in relation to their business under EU Solvency II proposals will hit Gibraltar companies hardest, because the jurisdiction’s present base-level is less than in the UK. As a result companies operating from
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Gibraltar motors speeding ahead Gross Written premiums (£bn)
Year 2009 2010 2011 2012
Gibraltar 1.2 1.47 2.38 2.62* * Estimated
Lloyd’s 1.12 1.1 1.19 Source: Deloitte, London
The Rock will need either to retain a greater proportion of profits within the business, or raise fresh capital to meet Solvency II requirements and, with the intervention of the Financial Services Commisison, the greater capital requirement is likely to be increased incrementally until 2016, Clarke pointed out. In the meantime, Robus, an insurance management company established in 2011 to provide services to insurers, reinsurers and brokers throughout Europe, became the first to be awarded Chartered Status by the Chartered Insurance Institute (CII) in recognition of its high levels of expertise and professionalism. Ray Spencer
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