Brexit could bring opportunities for Gibraltar’s captive insurance market, according to Nigel Feetham, a partner at Hassans International Law Firm.
In a statement, Feetham suggested that the higher capital requirements for captives in the EU, under the new Solvency II regime, mean that EU-based captives have become capital inefficient for some owners.
He said this means captive owners have either chosen to relocate their captive outside of the EU or used fronting arrangements.
Feetham suggested that a post-Brexit scenario therefore could give rise to an opportunity for Gibraltar in an area where, under current EU rules, it would not have been able to compete for business.
He explained: “For this to happen Gibraltar would require a new legislative framework to permit captive owners to set up captives in Gibraltar with less burdensome capital requirements similar to, say, Guernsey. The current legislative regime in Gibraltar is wholly unsuitable for this.”
He also predicted a boost in the use of Gibraltar protected cell companies by captives in such a scenario.
“In this regard, the sooner the UK negotiates with the EU the better it would be for Gibraltar as it would end any uncertainty and both the UK and Gibraltar can plan accordingly,” he said.
Feetham went on to say that the existing trading relationship between Gibraltar with the UK will not be affected by a Brexit, however, he suggested captives that write EU business will have to consider their position in the same way as any other company writing EU business would.
