Guernsey: Captives important to island’s position
Insurance, including captives, plays a key part in the economy of Guernsey, according to Mark Elliott, chair of the Guernsey International Insurance Association (GIIA).
“Captives are an important part of Guernsey’s reputation as an international finance centre,” Elliott told Captive International in the wake of Guernsey Finance’s announcement that the island has become the largest European captive Domicile.
“Incredibly important to this success is the desire to keep improving and this hasn’t stopped since our first captive was launched in 1922. Risk doesn’t stop changing and we need to keep adapting to ongoing challenges. As of 2016, the insurance sector as a whole makes up 20% of the financial services industry GDP and remains a critical foundation of the island’s economy.”
Asked where he anticipates seeing the biggest growth in terms of captives, by industry, he replied that it’s always difficult to predict which industry will see growth, as any demand is led by cover restriction, e.g. D&O and cyber that will affect multiple different industries.
“However, there are certain industries, energy and utilities for example, that are having a more difficult time than others accessing the value from the traditional insurance market and may turn to captives in the coming months,” Elliott told Captive International. “There’s a continued trend for the establishment of agency captives, i.e. captives that are established to support the capacity needs/desires of MGAs, as well as cell growth continuing to boom as medium sized enterprises seek efficient risk financing and access to wholesale markets.”
Elliott added it is important not to forget the importance of sustainability issues and its dominance of the global agenda. He pointed out that whilst climate change is only a small part of the global sustainability issues, in many cases, it is the one risk exposure that has dramatically risen through business risk priorities.
“With a captive insurer being an integral part of a corporation’s risk management strategy, it’s crucial they are involved in the growing need to address climate risk,” he concluded.