Captive insurance is a significant element of the insurance business in Guernsey, and those in the captive arena have been hailing the business as a great boost to Guernsey's economy and overall prosperity. Captive insurers - companies set up so that the parent company can insure its own risk, keeping the insurance premiums within the group structure - can be traced back to 1922 in Guernsey, when the first offshore captive was set up.
Mel Carvill, chief
executive of Generali Group in Guernsey, is the first to blow
Guernsey's trumpet. He said: 'Captive insurance has been a great
thing for Guernsey. It has created income and jobs and has all
been done because of local initiative and enterprise. The success
of the captive industry shows that it is not just tax breaks that
bring business to Guernsey. It is because we are a resourceful
community and we can see new opportunities.
The work of the Guernsey Financial Services Commission, particularly
the director of insurance Steve Butterworth, has established us
as the place in Europe which really understands and knows how
to work the captive insurance concept.'
Mr Carvill added that Guernsey’s captive industry represented
a revolution when it first began to evolve and that it had been
launched in the face of a good deal of negativity towards it on
a local basis. He said: 'What was launched then has proved to
be a great success. When you see the external threats being mounted
against us crime and quality of regulation do not feature in the
insurance sector. The only concern from outside is unfair taxation.
Taxation is not an issue for us. There are no tax breaks being
offered. What we can supply is stability, flexibility and expertise
of operation.'
The concept of the captive is constantly evolving. A pure captive only underwrites the risks of its parent company but Guernsey-based Polygon, for example, the aviation insurance specialist which began life in 1975 as a captive for KLM, SAS and Swiss Air, has expanded to provide insurance for many leading international airlines. Broad captives have emerged which insure third parties and Guernsey has become the home of many. At the end of 1999, Guernsey could count 364 registered offshore insurers, making the island the leading captive insurance location in Europe. Polygon's Richard Tee commented: 'In all, captive insurance has been one of Guernsey's great success stories and there seems no reason why, with the innovations that have been introduced in recent years, that it should not continue to grow.'
The main growth area in insurance business in Guernsey recently has been with the Protected Cell Company (PCC) which allows insurance risks to be written in different cells in a company each of which is legally separated from the liabilities of the others. In 1999, the number of cells in PCCs in Guernsey rose from 59 to 96. The PCC concept is starting to draw interest from elsewhere and several other jurisdictions have now introduced similar legislation or are considering it.
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