Gibraltar has been a recognised financial centre for over 30 years, and has developed a reputation for firm but fair regulation, and a well-developed mature infrastructure of professionals in a wide range of fields.
In 1997, Gibraltar acceded to the Single European Market for Insurance, its regulatory body (the Financial Services Commission) having been recognised as a competent regulatory authority within the EU.
Since then a number of insurance institutions of different types have made their home on the Rock, and enjoyed the benefits of being based here, among them:
Companies like these establish in Gibraltar to take advantage of the various advantages Gib offers:
Under the second and third life and non-life EU insurance directives, insurers and intermediaries based in Gibraltar can provide insurance in other Member States using its Gibraltar licence and without having to apply for a separate licence in the other territory. This can happen under either the Establishment or Provision of Services regimes.
Establishment enables a Gibraltar company to set up a branch in an EEA territory, and write business in that territory, without the need to apply to the host state regulator for a new licence. Its home state regulator, the Gibraltar GSFC, notifies the host state regulator of the company’s wish to transact business in this way, having received and approved a business plan from the insurer.
The host state has a right of reply within 2 months from the notification, although objections can only be made on the basis of a breach of “general good”, which has a narrow definition. Once the 2 months have elapsed, or indeed as soon as the host state regulator replies in the affirmative, business can start.
The insurer’s branch will be taxed on the basis of the branch profits, and the branch will of course have to follow host state legal requirements such as compulsory insurance, insurance premium tax etc.
Provision of Services allows the Gibraltar insurer to write insurance business cross-border, i.e. without a branch establishment in the host state. Again the process is one of notification by the Gibraltar GSFC, though business can start as soon as notification is deemed to have been made.
Provision of Services is suitable where no management or underwriting functions are carried out in the host state, and as before, host state legal requirements have to be complied with.
The GSFC describe the regulatory notification process to be followed in some detail in their Guidance Note No. 10 here.
Financial services regulation in Gibraltar, including insurance, falls under the Financial Services Commission (GFSC), a statutory body independent of Government, and therefore free of the possibility of any political influence.
The GFSC maintains a firm regulatory stance, ensuring Gibraltar is regarded as one of the better regulated financial centres, and in keeping with the requirement of its statute to “match” UK regulatory standards and practices. The GFSC does however have the option to exercise a degree of flexibility and discretion, especially in the way it goes about dealing with regulated firms.
This accessibility and approachability makes the Gibraltar regulatory experience a much more palatable and responsive one than in many other territories.
The GFSC is overseen but not controlled by the UK, and to this end regular reviews have been carried out:
All reviews have endorsed the quality of Gibraltar’s regulation, making the Rock a blue-chip domicile in which to do business, but with a human face.
The GFSC maintains as an absolute minimum the solvency levels required under EU legislation, and usually in excess of the minimum. The GFSC’s adaptive approach ensures, however, that the solvency levels applied in each case are appropriate to the size and nature of the regulated firm, and fully discussed with and understood by the firm’s shareholders.
Gibraltar’s cost base has proved a popular attraction for a number of insurers. Office rents are not high compared to other potential locations, salaries of local office staff are not excessive, due to relatively low living costs, and cost of other services are competitive. Gibraltar has no job quota or property ownership restrictions.
Corporate taxation is a flat 10% on taxable profits for most companies, with investment income excluded from taxable profits. Therefore, the average corporate tax in Gibraltar for insurance companies is often less than 10%.
Apart from these principal benefits, Gibraltar has other merits to consider: