PwC has released a report outlining the five highest priority recommendations for the Guernsey re/insurance market.
These recommendations include: market consolidation and expansion; regulation and legislation; resourcing; and promotion. This is to maximise the conversion success of the re/insurance growth opportunities.
In terms of market consolidation and expansion: PwC believes that Guernsey should target the international re/insurance ‘movers and shakers’.
“The sector should draw up a target list of key executives and entrepreneurs in the reinsurance and alternative reinsurance international community to pitch directly the benefits of Guernsey as a place for them to do business. They could start the domino effect,” the report said.
It also states that they should establish a regular sector forum to ensure strategic alignment and conduct a sector-specific general data protection regulation (GDPR) impact assessment.
“The EU’s GDPR will have a significant, unavoidable impact on Guernsey financial services businesses. The data-heavy nature of insurance means the sector needs to pay special attention.”
For regulation and legislation, PwC claimed that a convergence capital working party needs to be created to devise new legislation and regulation.
“Alternative reinsurance has potential for huge growth. Offering a legislative and regulatory framework engineered specifically for this market would be a loud statement of intent from the island and place Guernsey ahead of its competitors.”
For resourcing PwC said; “States of Guernsey’s (SoG) new population management system includes provision for employment permit prioritisation on the basis of skills shortages and potential economic benefit. The Guernsey International Insurance Association (GIIA) should create and maintain a list of skills-in-demand on behalf of the sector and ensure this is shared regularly with the Population Management office via the newly formed ‘Population Employment Advisory Panel.’”
“SoG should prioritise the continued support of both agencies and work with them to develop sustainable, long-term funding models.
“The new SPI Rules will improve the ease with which alternative reinsurance business can be run from the island. This should be communicated to the insurance market in tandem with their launch in 2017,” the report said.
PwC said that the Guernsey re/insurance sector is well-placed to take advantage of growth opportunities.
“It is now for the industry leaders and stakeholders to work together to take clear, proactive steps to realise them,” PwC added.
“The island is a centre of excellence for captive insurance and international life business. Of the 810 international insurers currently licensed in the island, 347 are captives.”
The results of PwC’s insurance managers survey show that third party insurance management, which includes captives, continues to be a significant driver of employee numbers and revenue generation.
“The Guernsey insurance sector in 2016 is optimistic: local insurance managers indicated an average confidence level of 3.8 out of 5. The island and its insurance sector have extensive strengths that underpin this,” PwC said.
PwC states that traditional captives remain the core of Guernsey’s international insurance market. The introduction of new captives has leveled over recent years, impacted by a variety of factors such as recent increases in UK IPT rates (12 percent from June 2017).
The report also said that local managers and UK brokers have started to look to new markets and products with which to bolster the pipeline of new business.
“Guernsey is well known for providing captive insurance services to significant numbers of public companies. Approximately 40 percent of the FTSE100 and 95 of the global 500 companies have captives in Guernsey.
“Captives also present an opportunity for parent entities to self-manage cyber risk. Policies can be written and calibrated over a period of years to find the correct balance of cover. If desired this cover could then be reinsured to the market.”
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