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Insurance
Newcomers confounding Brexit uncertainty as focus intensifies on solvency compliance
motor insurers to establish in Gibraltar, a decision it said had “proven very successful”, and it is developing products beyond motor business to include household cover, “offer- ing a lifeline for those who struggle to obtain buildings and contents insurance through the mainstream market”.
“There are other businesses looking at Gibraltar”, Michael Ashton, a senior insurance specialist at the government’s Gibraltar Finance, told Gibraltar International. “Gibraltar’s life insurance sector is tiny compared to the non-life sector but new life insurance business are currently looking at the possibility of establishing in Gibraltar.”
Under the EU Solvency 2 (S2) Directive, that amongst other things required insurers from 2016 to have much greater working capital and
reserves, monoline insurers can benefit from diversification Slovakian regulator “comfortable” by gaining credits that with Gibraltar: Andy Baker, new
Premium Insurance CEO
Efforts to attract new insurance business are starting to reap dividends with Gibraltar acting as a gateway to theUK,RaySpencer finds,andthe Regulator is focusing on capital and risk requirements to ensure consumers are protected
Large Gibraltar motor insurers continue to grow and remain the dominant part of the Gibraltar market, but the potential to
generate non-motor business over the next few years also looks promising.
Gibraltar Financial Services Commission (GFSC) is processing at least five insurance company licence applications submitted in April and May, compared with just one in the 12 months previous. A further three general insurance intermediary applications have been submitted in the two months, the same as
that for the whole of the year to March. In addition there is a life intermediary business in prospect.
At present, there are 61 insurance entities licensed, with a total premium income of circa £4.8bn, and of that the two Life insurance businesses account for just £150m.
It can be revealed that a large US-based insurance entity offering a line of
Some firms business new to Gibraltar, but aimed
must rework capital needs, be “very big”, following its planned launch in
we will see fewer smaller insurance start-ups in Gibraltar."
Some insurers have reduced their underwriting capacity because of capital constraints. Even so, some other firms are said still to be coming to terms with S2, particularly the capital requirements, and industry insiders describe them as “living on borrowed time”!
Casualty & General Insurance Company (Europe), a privately owned company was one of the first non-motor insurers in Gibraltar in 2003 and specialised in defects and surety business in the UK and across Europe, including Belgium, France, Germany, Ireland, Italy, Netherlands and
Norway. However, in March
CGICE ceased writing its UK motor book – premiums £20.4m last year - following the decision by the UK’s Lord Chancellor to reduce the per- sonal injury payment discount
exclusively at the UK market, is expected to says Joe Pardon, August, assuming GFSC approval.
effectively reduce the amount of money that must be held to protect against the risk of business failure.
Gibraltar’s Markerstudy, formed in 2001 and best known for motor business, acquired two pet insurance companies – Purely Pets and Paws and Claws - in 2015 after taking over Ultimate Insurance Solutions, cementing a pets diversification move that began two years earlier when gaining BDML. Growing from one to 12 staff, the firm now insures and brokers a number of non-motor related products, including commercial (non-motor), travel and gadget/mobile phone and home insurance.
The widening scope was not prompted by S2 requirements, however: “We are a dynamic underwriter who will write classes where we see an opportunity to make a profit. Pet business is treated more harshly than motor under Solvency 2, for example”, Markerstudy said.
Nevertheless, Ashton suggested: “S2 has been a game changer for the insurance sector. Previously entrepreneurs were able to establish a new insurer with the minimum capital requirement, but S2 has introduced more onerous capital requirements. I believe
rate of calculation from 2.5% to minus 0.75%, and the market volatility which followed. CGICE was unable to gain sufficient reinsurance cover at an acceptable cost, but it “continues to monitor future developments”, according to its Solvency and Financial Condition Report for 2016, just
published. Similarly, Gibraltar’s Horizon Insurance
(formerly known as Octagon) stopped renewing or accepting motor policies from end-December; the directors said it was because they were unable to secure additional funding to meet business plans from 2017 – but, crucially, emphasised the decision was not related to S2 capital requirements.
The Gibraltar government was also in March forced to step in and issue a statement emphasising “its complete support for the insurance sector in Gibraltar and confidence in the important role played by the GFSC in delivering high European standards of insurance regulation”.
The unusual move was prompted by media reports on comments by the Irish Regulator, the Central Bank of Ireland and in
Continued overleaf
GFSC head of prudential
Gibraltar-based insurers mostly underwrite motor policies, the 26 firms together accounting for over 60% of the UK market, although there is a growing diversification, including healthcare, pet, legal and other niche areas.
Admiral, the large UK-facing car insurer, is writing roughly £1bn of premiums in Gibraltar and of that around 10% is now with homeowners.
Another, Hastings Group (through Advantage, the Gibraltar subsidiary), has started in a small way to write home insurance - around 10% of premiums.
Haven, in 2002 was one of the first UK
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Gibraltar International
www.gibraltarinternational.com