Insurance

Insurance business in Guernsey

Guernsey is perhaps best known as one of the world’s leading captive centres; offering a domicile for self-insurance for firms.

These firms are mainly located in the UK but a significant portion of the Guernsey captive industry originates from around the globe.

Apart from captives, Guernsey is also recognised as being a centre for reinsurance and insurance linked securities; offering in particular collateralised catastrophe reinsurance. Guernsey also serves ex-patriates especially for life and health insurance. Finally, Guernsey houses several local general insurance businesses serving both the local and international communities. Guernsey pioneered the protected cell company and more recently has seen growth in the use of the incorporated cell company, not least for the transfer of longevity risk for pension funds.

The Commission regulates insurance managers, who facilitate insurance business, and insurance intermediaries, mostly covering local broker requirements.

At the last third party review by the IMF in 2010, Guernsey was observant or largely observant in all but one of the international core principles.

Guernsey plays an active role in the International Association of Insurance Supervisors (IAIS) and currently chairs the Group of International Insurance Centres Supervisors (GIICS).

Approach to supervision

The Insurance Division supervises its licensed insurers, insurance managers, and insurance intermediaries by conducting regular off-site monitoring supplemented by periodic on-site monitoring.

Off-site Monitoring

Off-site monitoring is performed either on a prospective basis (i.e. before the event occurs) or on a retrospective basis (i.e. reviewing past performance).

Prospective supervision

LICENSED INSURERS

Licensed insurers are required to notify the Commission of, and in some cases obtain the Commission’s prior approval for, material changes to the circumstances of the licensed insurer. Some of the more common changes requiring notification are listed below:

Material change to the business plan - Under section 11(2) of the Law, any proposed material change to a licensed insurer’s business plan is subject to prior notification to the Commission. The Commission therefore expects to receive an amended narrative business plan reflecting the proposed change, together with an amended spreadsheet business plan, for consideration prior to such a change being implemented.

Change of director, controller, partner, manager or general representative - Under section 25 of the Law, a licensed insurer must obtain the Commission’s prior written approval before effecting any change of any director, controller, partner, manager or general representative. Any such proposed changes should be submitted in writing to the Commission.

Change of auditor - Under section 34 of the Law, a licensed insurer must notify the Commission in writing of any change of auditor and the reason for the change. In addition, a licensed insurer must appoint a new auditor within 28 days of the resignation of the previous auditor unless otherwise agreed in writing by the Commission.

Change of actuary - Under section 40 of the Law, a licensed insurer must notify the Commission in writing of any change of actuary and the reason for the change. In addition, a licensed insurer must appoint a new actuary within 28 days of the resignation of the previous actuary unless otherwise agreed in writing by the Commission.

Please note that the above list is not exhaustive and should only be used for information purposes. Whilst the Commission is happy to provide help and guidance on what may require notification or approval, the licensed insurer and its general representative are ultimately responsible for ensuring compliance with all relevant laws, regulations, rules and codes.

INSURANCE MANAGERS & INTERMEDIARIES

Licensed insurance managers and insurance intermediaries are required to notify the Commission of, and in some cases obtain the Commission’s prior approval for, material changes to their circumstances. Some of the more common changes requiring notification are listed below:

Material change to the business plan - Under section 27(2) of the Law, any proposed material change to a licensed insurance manager’s or insurance intermediary’s business plan is subject to prior notification to the Commission. The Commission therefore expects to receive an amended narrative business plan reflecting the proposed change for consideration prior to such a change being implemented.

Change of director, controller or partner - Under section 37 of the Law, a licensed insurance manager or insurance intermediary must obtain the Commission’s prior written approval before appointing any director, controller or partner. Any such proposed changes should be submitted in writing to the Commission.

Change of authorised insurance representative - Under section 38 of the Law, a licensed insurance intermediary or insurance manager, where applicable, must notify the Commission of the change of any authorised insurance representative within 14 days of such a change being made.

Change of auditor - Under section 21 of the Law, a licensed insurance manager or insurance intermediary must notify the Commission in writing of any change of auditor and the reason for the change. In addition, the licensee must appoint a new auditor within 28 days of the resignation of the previous auditor unless otherwise agreed in writing by the Commission.

Please note that the above list is not exhaustive and should only be used for information purposes. Whilst the Commission is happy to provide help and guidance on what may require notification or approval, each individual licensed insurance manager or insurance intermediary is ultimately responsible for ensuring compliance with all relevant laws, regulations, rules and codes.

Retrospective supervision

All licensed insurers, insurance managers, and insurance intermediaries are required to submit an annual return to the Commission containing information in respect of past performance. Please refer to the Returns section for further information in respect of the annual return requirements. Where serious issues have been identified, such as solvency breaches, the Commission may require the licensed insurer to provide additional information and/or take immediate action to rectify the position.

Licensed insurers writing long term business are required to appoint an independent, Guernsey-based trustee who must report full details of the assets held in trust to the Commission on a quarterly basis.

On-site Monitoring

The Insurance Division performs regular on-site visits to its licensees to enhance the Division’s understanding of the licensee’s business and to review the risk management systems and internal controls in operation. These visits may be carried out on a full scale basis, covering all risks to which the licensee is exposed, or on a focussed basis, covering specific areas of concern such as corporate governance, market conduct, or anti money laundering procedures.

In addition, the Insurance Division holds both regular and ad hoc meetings with its licensees to keep abreast of any significant developments and to discuss any issues that may arise.