One size never fits all – a Dual Regime is needed

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By David Coupe, InsureLaw Consultants Limited

T he UK insurance sector complains about costly, burdensome and unnecessary regulation, and unresponsive and slow regulators. The UK market is recovering from significant claims and suffering inflationary times, and raising more capital is more costly. Insurers and MGAs are pulling out of lines simply because they are too difficult to deal with due to regulatory or cost reasons. Expenses, especially salaries, have risen. And all of this despite premium rates increasing and holding steady for 2024. UK entities are crying out for real game changers, and Gibraltar can provide this.

Artificial Intelligence and technology

The noise is around the use of AI and technology to drive “better outcomes” for insureds, and reduce costs. However, the UK doesn’t need an offshore innovation hub for these – it has them and they are well funded. Lloyd’s and the UK have brought in and/or developing captive regimes. Bermuda, Guernsey and others offer successful PCC structures that are more flexible than Gibraltar’s. Dublin, Dubai and others have set up separate financial services centres with tax breaks, lower levels of regulation, and other incentives.

Speed to market is fundamental. UK entrepreneurs are being stifled by slow regulatory processes. For each that succeeds, twenty don’t. What is a great idea today often disappears tomorrow. Guernsey has recently approved a commercial MGA and Protected Cell structure in a little over 2 weeks, and yet no one sees Guernsey as an unsafe financial regime (albeit that Guernsey isn’t bound by UK regulations).

The current drive to promote local talent is to be applauded. However, without the experienced mentors, who will teach them? How would we attract senior underwriters to come here to pass their knowledge? Could we create an Insurance, AI and Insurtech University? Could we sponsor UK expertise to come?

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Financial Conduct Authority

The Gibraltar Authorisation Regime (GAR) will tie UK and Gibraltar regulation together. Gibraltar will have free access to the massive UK market. However, GAR brings difficulties. The UK will want Gibraltar to provide no less regulation than in the UK. However, if the FCA Handbooks are substantially adopted, then we must accept that (I am told) some 8 metres of paper piled high will need to be embedded into Gibraltar laws. Gibraltar doesn’t need this – we need the “dual regime”.

What is the dual regime? The UK will not allow Gibraltar to operate a lesser regime regarding UK consumers (however badly embedded in the UK already). However, when dealing with “non-consumers”, we should be insisting on creating a new focussed and flexible wholesale regime. The FSC should set up a corresponding separate wholesale division to deal with this regime.


A Gibraltar regime created for the nonconsumer business with lighter touch regulation promising quicker response and speed to market would clearly be of interest. A UK MGA or wholesale broker dealing with producing brokers in say the US is regulated like any other broker. They must currently comply with a consumer code which has little or no relevance to them. There is supposed to be proportionate regulation, and yet the dividing line in the UK is distinctly blurred. Who does this benefit? Let Gibraltar create regulation that reflects genuinely what these intermediaries do with lower cost and regulation.

Gibraltar could offer the incentive to them: split your businesses, and bring your wholesale business here. Where these large businesses go, they bring the insurers and markets with them. This brings little or no regulatory risk or need for regular oversight. We should reduce the capital requirements for these brokers and MGAs. The 4% level is considerably greater than in the UK, and disincentive offering no benefit. Wholesale businesses facilitate the distribution chain. If they disappear, the insured suffers no loss since its contract is with the insurer and remains. None of the top 10 wholesale MGA’s or brokers would simply walk away from a Gibraltar operation due to the reputational damage it would cause.


We would not need the current requirement for Gibraltar resident directors. These wholesale businesses operate around the world – they work by Zoom. This doesn’t reduce accountability. And each Gibraltar entity will in any case benefit from massive PI and D&O programmes written by each group.

We should disapply Section 83A for these entities. The Section is a significant turn off for overseas investors. They view it as something far more invasive than in the UK, and an unnecessary regulatory interference. The wholesale market will not come with this in place.

Why cannot we have a PCC structure for aligned wholesale intermediaries with lighter touch regulation, and a real speed to market? MGA’s want their own captive capacity – why not an MGA PCC running alongside and Insurance PCC, with each cell writing niche business?

Developing reinsurance and ILS markets alongside this wholesale market should be attractive to Gibraltar. We don’t need the UK’s consumer duty hovering over these. Again, these should need less regulatory supervision and should not threaten the stability of Gibraltar direct UK offering.

The idea of splitting consumer business away from other business clearly makes sense. Let Gibraltar prove to the UK and the international markets that an offshore wholesale market can be created that benefits all.