Guernsey has an international reputation for its robust, flexible business laws. When companies are looking for a place to do business, Guernsey ticks all of the right boxes. It has a strong financial services pedigree, and a solid track record in the insurance industry.
Guernsey has an international reputation for its robust, flexible business laws. When companies are looking for a place to do business, Guernsey ticks all of the right boxes. It has a strong financial services pedigree, and a solid track record in the insurance industry.
The first captive opened on the island in 1922, 30 years before the term was even coined.
These days, Guernsey is in the big leagues in terms of captive domiciles. More than 770 captive structures call the island home. Only three other jurisdictions in the world can claim more. More than 40 FTSE 100 companies listed on the London Stock Exchange have a captive based in Guernsey, which is an astounding headline statistic for the island.
Clive James is COO of the Kane Group, an insurance management services company with a presence on the island. He believes that Guernsey’s strength as a captive domicile lies in the open communication channels between the industry and the regulator.
“One of the great things about Guernsey on the insurance side is that we sit down and have regular meetings with the regulators. They are willing to help us through issues as well as just going through the standard regulatory process. To remain competitive the regulator needs to continue this interaction, as they have done for the 25 years I’ve been in the business in Guernsey.”
Horses for courses
The calibre of the workforce in a jurisdiction is a contributing factor to any domicile’s success. Is Guernsey doing enough to foster talent in this area?
James said: “At the moment, no, there isn’t enough being done. Education is a highly political issue within Guernsey at the moment, and it is going through a number of changes. Finance driven trade associations such as the GIIA have been trying to push the idea that secondary education should be geared towards the local industry. But at the moment it’s not like the German model, where that happens. This is true of the UK generally.”
“It can be improved if there is more interaction between the industry and the education authorities. We need to sit down with the education department and put together a more appropriate syllabus in terms of the subjects that are relevant here in Guernsey. If we are going to have more finance expertise going forward, education needs to be a part of that.”
Ahead of the competition
It seems that each new month brings the opening of a new captive domicile, particularly in the US. With competition so strong, Guernsey has much to do remain competitive as a captive domicile.
Gavin Parker, Barclay’s head of offshore and local markets in Guernsey, takes the view that the island’s history in the industry keeps it ahead of the competition.
“There is much to be said for pedigree in this industry. Where Guernsey has robust regulation and service providers, any new jurisdictions have a lot to prove to be able to compete at this level. The culture that develops within a jurisdiction over time cannot be replicated overnight and certainly, from a Guernsey perspective, there are a host of industry bodies and support businesses that have put considerable effort into growing a ‘can do’ culture that is both innovative and service driven.”
Guernsey has never been a domicile to sit back and watch what the competition is doing, he adds.
“[The island] has committed to the captive sector for many years, and through the creation of its protected cell company/incorporated cell company structures and regulations, as well as its thoughtful and proactive response to Solvency II, I believe has proven that it sits at the forefront of change to improve client experience. With the advent of the creative insurance-linked securities structures and Guernsey’s service providers seeking to embrace these and create ways to work with them, Guernsey has once again evidenced to the wider captive community that it is both nimble and accommodating with the sector’s change in appetite and demand.”
“Guernsey has an ideal geographic position to service the UK and mainland Europe and as long as it remains as progressive as it currently is in its approach, it will be difficult for other jurisdictions to compete over Guernsey for newly formed captives.”
Parker also believes that increased competition is a good thing for the industry.
“It is important to say that it is really positive to see a greater number of jurisdictions involved in the industry. It supports and strengthens the global message that a captive insurance company is a valuable asset to any large corporate. It also makes a large statement about the perceived value of the industry, to not only the existing jurisdictions, but also to newer territories. More competition drives greater innovation and that can only be positive for clients of the sector.”
It is clear that Guernsey and the companies that do business there are looking to the future with optimism. The island is ready to face the challenges of the future, and willing to stand its ground in the face of outside legislative pressure.
Guernsey has an internationalist outlook, as demonstrated by the recent agreements signed between it and China. With the right balance of regulation and openness, the island has a solid future ahead of it as a captive domicile.
