Details of how to apply for a licence to write insurance business are set out in the Applications page of this website.
Details of how to apply for a licence to conduct business as an insurance manager or insurance intermediary are set out in the Applications page of this website.
Please refer to the Regulated Entities page of this website for ;a list of licensed insurers, licensed insurance managers and licensed insurance intermediaries. Alternatively, if you know the name of the company you are looking for, you can use the search facility at the top of this page.
The Commission is the regulatory body for the finance sector in the Bailiwick of Guernsey and is therefore not in a position to recommend the services of a particular licensee. Please refer to the Regulated Entities page of this website for a list of insurance managers and insurance intermediaries licensed to conduct business in or from within the Bailiwick of Guernsey
A Guidance Note for Licensed Insurers on Outsourcing can be found here.
Please refer to the Recognised Insurers, including Authorised Motor Insurers page of this website for further information.
Please refer to the Minimum Capital Requirement for Licensed Insurance Managers and Licensed Insurance Intermediaries for further details.
Certain forms of insurance business are regulated under the provisions of The Insurance Business (Bailiwick of Guernsey) Law, 2002, as amended The Insurance Managers and Insurance Intermediaries (Bailiwick of Guernsey) Law, 2002, as amended Whilst Commission staff will be happy to provide general explanations of what activities the laws cover, they cannot provide legal advice in respect of specific circumstances. If you are in any doubt as to the position, you should seek advice from a lawyer qualified in Guernsey law.
Following receipt of several enquiries regarding lending companies providing finance to residents of the Bailiwick of Guernsey to fund their insurance premiums, the Commission has issued the following response:-
Where a company, which is not registered in the Bailiwick, provides finance facilities to customers of locally licensed insurance companies/intermediaries, the Commission may issue a direction to that company under section 44 of the Registration of Non-Regulated Financial Services Businesses (Bailiwick of Guernsey) Law, 2008 (“the Law”) that it is not to be treated for the purposes of the Law, as carrying on business in or from within the Bailiwick and so is not required to register with the Commission as a Non-Regulated Financial Services Business.
All prospective applicants will be considered on a case by case basis.
In order for the Commission to issue such a direction it must first be satisfied that due consideration has been given by the applicant to each of the provisions of section 44 of the Law and must have received sufficient explanation as to why the applicant does not believe it is seen to be carrying on business in or from within the Bailiwick.
The Commission may at any time either generally or in any particular case revoke this derogation, or impose conditions for it to be operative.
This is the reference number shown against the licensee name on the Commission’s list of licensees. Each PCC cell also has its own unique reference number and the Commission wrote to all PCC managers with a list of relevant reference numbers. Please note this is not the same as the Guernsey Registry reference nor is it necessarily the same as the number on the licence certificate as many older certificates were issued prior to the Commission’s current numbering system.
You must submit all parts of the workbook, including the validation log, as part of the annual return.
For each PCC you must complete a separate solvency workbook for the Core and each individual cell. You must then complete the PCC Summary spreadsheet which works out the solvency for the overall entity.
Life insurers and domestic general insurers are required to produce an ORSA if they meet the premium income or technical provisions limits set out in paragraph 200 of the rules.
The Commission expects the Board of every firm to make its own assessment of its solvency requirements. The Board may conclude that the PCR represents a sufficient assessment of its solvency requirements but must record this decision and the reasons for reaching that conclusion.
The treatment of loans is now catered for in the Rules, and dealt with automatically in the spreadsheet, with a capital charge being applied depending upon the credit rating of the loan counterparty. You do not need to notify the Commission nor seek approval to make a loan.
The category 6 treatment for solvency purposes must be agreed in writing by the Commission. It is intended for fully funded entities primarily those which are fully collateralised, such as ILS cells. Merely being 100% reinsured does not qualify for category 6 because there is still the default risk in relation to the reinsurance programme to be taken into account. Similarly, having the current policy year aggregate limits fully funded by capital does not qualify for category 6, since we need to take prior policy years into account as well. Overuse of the category 6 classification will undermine the solvency framework and we would therefore encourage Managers to consider carefully whether a category 6 rating is justified.
Solvency requirements, including the preparation of an OSCA, do not apply to branch operations since the Commission is not the prudential regulator. However, the Commission may specify that certain funds must be retained in Guernsey and may also apply the standard condition relating to policyholder protection.
If the PCC Core is writing insurance business then it will fall into the category applicable for the business being written. If the Core is not writing business it should be classed in accordance with whichever of its cells attracts the highest confidence level (e.g a PCC with both life and general cells will be classed as category 1 or 2 whilst a PCC with only category 5 insurers would be classed as category 5.)
Letters of credit can be provided by others for the benefit of the insurer (inwards LOC) or provided by the insurer for the benefit of others (outwards LOC). Inwards letters of credit, for example those provided by a parent company, may be included in the basis adjustments of the balance sheet assets according to whether they are Type 1 or Type 2 letters of credit as defined in Schedule 3 of the Rules (see also guidance on the spreadsheet). Both types are eligible to meet PCR but only Type 1 letters of credit are eligible to meet the MCR. Outwards letters of credit should be included within the basis adjustments column for off-balance sheet liabilities to the extent that they may influence future profitability and solvency. However, outwards LOCs issued to fronting insurers that can only be drawn upon to meet relevant claims which are already reserved on the balance sheet (and therefore already accounted for under the PCR) need not be included since any drawdown on that LOC should reduce the technical reserves on the balance sheet and therefore should not impact on future profitability and solvency. Any deposit held with the bank as collateral for the LOC would be subject to interest rate risk and spread risk. There may be situations were a LOC is provided to a fronting company by the Parent. This is an off balance sheet asset however it would not meet the rules for a Type 1 letter of credit and can therefore only contribute to the PCR and not the MCR.
The parent company rating may be applied to unrated Guernsey banks as per Schedule 8 and Schedule 9 to the Rules.
Fixed deposits may be treated as cash or as deposits depending upon the term of the deposit. Deposits of less than three months or those which can be broken without significant penalty may be treated as Cash and Cash Equivalents. Other deposits should be included as Deposits.
Money Market funds should be treated as Investment funds.
You should choose the class of business which is most appropriate for the business being written per the descriptions in Schedule 2 of the Rules. Only choose ‘Miscellaneous’ if there is nothing which better describes the business being written. The non-proportional classes of business attract a higher capital charge and are intended to be used for reinsurance business where the insurer is covering layers of risk attaching at higher levels. However, if an insurer is reinsuring a fronting insurer for what would otherwise be the primary layer of risk then there is no need to select the non-proportional class.
This reflects the potential default of a reinsurer in respect of the unexpired proportion of the policy year. The default risk in respect of the reinsurers’ share of claim reserves only reflects the potential default on the expired portion of the risk.
Given that uncalled share capital is included as an asset for PCR purposes it is necessary to reflect the potential default risk of the shareholder counterparty.
Parental guarantees may be included as other off balance sheet assets and related default risk charge must be applied.
Regulatory adjustments must be agreed in writing by the Commission. If you wish to apply for a regulatory adjustment please contact the Commission stating why the adjustment is required and why you believe it is justified, together with supporting evidence. You should also state for how long the adjustment will be required and how the company will otherwise restore its solvency margin. It is also helpful to attach the latest regulatory solvency assessment, latest management accounts and an up to date business plan. Regulatory adjustments will not be considered if a company is meeting its MCR and PCR.