Isle of Man Insurance and Financial Services Authorities Decide Against Merger

by Robert Lee, Tax-news.com, London

18 April 2001

Following discussions with the Isle of Man Treasury, the island's Insurance and Pensions Authority (IPA) and the Financial Supervision Commission have decided not to merge to create one combined institution. The Isle of Man has a burgeoning insurance sector and certainly major players on the Manx insurance scene have welcomed the decision to keep the two regulatory bodies separate.

Annual premium income brought to the island by its insurance industry amounts to more than £4.5bn. Moreover, the funds invested by that industry are in the region of £16bn, much of which is invested through other sectors of the island's financial services market place. The Isle of Man is also a major centre for captive insurance, and the IPA has pledged to futher develop this segment of the industy, something it might well be able to do better by remaining independent rather than amalgamating.

In confirming the Treasury's decision to abandon plans for a merger, Treasury Minister Richard Corkill commented: 'It is important to ensure that governments keep their regulatory systems under review, to ensure that they continue to match the needs of their market. In so doing it must be acknowledged that there are important differences between countries. A solution relevant to one does not necessarily mean that such should be imposed upon another.'

Norman Radcfliffe, the IPA's Chairman, added: 'The arguments in favour of a "super-regulator" are anything but clear. Not only in the Isle of Man, but also in the far corners of the world, the IPA enjoys in its field, a reputation that is second to none. The island's insurance business is unique. That it enjoys a regulator, which provides focus, has unquestionably been a catalyst to what the island now enjoys.'

IPA chief executive, Bill Hastings, said: 'Retention of an independent regulatory body for insurance will not in any respect undermine the maintenance of the International Standards which, for insurance, the Authority sets out to maintain. The Treasury's decision means, once and for all, that uncertainty is removed.'

The decision to retain the IPA as its independent regulator has been welcomed by the insurance industry. Lee Tyrer, Chairman of the Manx Insurance Association, said: 'There can be no doubt that a major factor in the growth of the industry on the island has been due to the proactive role of the IPA. The risk of dilution of this knowledge and experience by absorption into a "super regulator" has been avoided therefore. That is excellent news for the Isle of Man.'

Jim Boyd, recently appointed to the Chair of the Isle of Man Captive Managers Association, said he too welcomed the decision to keep the functions of the IPA and the Financial Supervision Commission separate: 'I am delighted at the Treasury's decision', he said. 'As our regulator, the Authority is fully conversant with the technical aspects of our industry. I am confident that the Association, jointly with the IPA, will now be able to focus on developing further the Isle of Man as a centre of excellence for Captive insurance and other similar risk financing operations.'

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