GIBRALTAR: INSURANCE AND PENSIONS

Insurance and Pensions

See Offshore Business Review – Insurance for a more general treatment of captive insurance companies.

Insurance companies in Gibraltar operate within the overall structure of the EU's Third Life and Non-Life Directives. The Commissioner of Insurance regulates and licences insurance companies in Gibraltar under the Insurance Companies Ordinance 1987. The issue of a licence depends on the expertise, business integrity and funding of the applicant. An insurer must maintain a guarantee fund related to its level of business: minimum guidlelines (as in EU legislation) currently vary from 200,000 to 400,000 Euros.

Insurance companies licensed in Gibraltar must maintain a place of business in Gibraltar. Annual financial statements must be submitted to the Financial Services Commission within 6 months of the expiration of each fiscal year. Any intended change in company control must first be approved by the Commission.

See Offshore Tax Regimes and Law of Offshore for further details of the regulatory regime, the licensing process and the offshore tax possibilities for insurance companies in Gibraltar.

Gibraltar has fully implemented EU insurance directives, and under the 'common passport' rules Gibraltar insurance companies can therefore write business into the EU without needing to establish a presence in the jurisdiction concerned. Taken together with Gibraltar's other advantages (well-educated, English-speaking, low-cost, available labour force; comparatively cheap fee structure; good telecommunications; very competitive tax structure) it would seem that this should encourage the development of a European insurance marketing sector in Gibraltar, although this has yet to happen on a significant scale.

Said the government in 2005: "The number of Insurance companies continues to grow, making this the biggest growth area in our finance centre. Last year they grew in number from 39 to 45. Their number has doubled since 2002 and very nearly quadrupled since 1999. Employment in the insurance industry grew by 42 persons in the year to March 2005. It has increased to 232, an increase of 40% since June 2001 when it stood at 165. Needless to say all these figures are at record level. The Government will continue to work closely with the insurance industry to market Gibraltar’s attractions to the insurance industry and thus to continue to grow our participation in this sector."

Gibraltar captives can write business anywhere within the EU, and there is provision for both protected cell companies and rent-a-captives.Comprehensive new legislation for protected cell companies was passed in the House of Assembly in July 2001 as the Protected Cell Companies Ordinance. See a detailed description of the new law in Law of Offshore.

An initial fee of G£500 is payable with the licence application to the Financial Services Commission and an annual fee of £2,000 is payable thereafter.

Gibraltar is aware of the possibilities there are to establish base operations for the EU-wide pension schemes of multinationals, and the Government is actively planning appropriate legislation in partnership with the private sector. Gibraltar needs to be able to compete against Luxembourg, which is planning in the same direction, by offering the maximum flexibility and the best facilities.

Meanwhile, like other UK offshore territories, Gibraltar is a suitable place to base tax-efficient pension and annuity schemes.

The passporting of insurance and reinsurance mediation from Gibraltar throughout the EEA came into effect on January 15, 2005.

Passporting rights arise under the single market directives, and grant a person in the designated jurisdiction the right to establish a branch in another EEA state or to do business there on a cross-border basis, subject to the fulfillment of the conditions in the directive in question.

This was the fourth passporting badge awarded to Gibraltar, following insurance in 1997, banking in 1999, and investment services in 2003.

According to the Rock's financial services authorities, the passporting of insurance and reinsurance mediation was enabled by the passing of an amending ordinance, the Financial Services (Insurance Mediation) (Amendment) Ordinance 2004 in the House of Assembly on December 22, 2004. The Ordinance amended the Financial Services Ordinance 1989 in order to transpose into the law of Gibraltar Directive 2002/92/EC of the European Parliament and of the Council of December 9, 2002 on insurance mediation.

The Ordinance provides for the regulation of insurance and reinsurance mediation, including such activities as: