The topic of licence fees has been discussed within the insurance industry and by GIA with the FSC on various occasions over the last couple of years.
Whilst senior resource in the FSC was perceived to be thinly spread with an ever-expanding and maturing industry, the industry has on more than one occasion expressed itself willing to pay higher licence fees to maintain service levels.
Comparisons with other domiciles, especially mainstream territories where open market insurance providers could alternatively be based, consistently showed that Gibraltar was a cheap option, and the 2013 GIA Survey revealed that a massive 64% of respondents would pay more fees for improved levels of service!
2014 has seen a major restructuring and restaffing exercise going on in the FSC, from the top down, following the retirements of Marcus Killick and Mike Oliver, and the future of insurance regulation in Gibraltar looks brighter than ever.
It’s therefore time to pay the piper and the FSC yesterday issued their Consultation Paper regarding fees, looking for responses by close of play on Tuesday 17 March. This paper covers the whole finance sector, so look for the Insurance section starting on page 11.
Look for the Consultation Paper at this link. GIA will be making a response to the paper, so please either feed your comments in to Chairman Chris Johnson or, if you prefer, directly to Philippa Baldwin at the FSC as per the CP.
The intention is for this to be the first part of a two-stage process. In a year’s time, the FSC will look again at fees, in the light of the make-up of the market then and the regulatory costs, taking ongoing Solvency II costs also into account, and will recalibrate where necessary. That does not necessarily mean fees will go up again across the board, but some adjustment will be needed – of course the process will be discussed with the industry as now.
The Solvency II Levy is a separate element of fees and the second tranche of the Levy (equal in amount to the first if the company falls into the same band) will be charged in April, based on the written premium and technical liability factors applying to the company at that time.
It’s a more expensive time for insurers, but the FSC has sought to remain competitive in fee pricing, not only with mainstream domiciles such as UK or Bermuda but also domiciles in the same market space as Gibraltar.