Isle of Man: Insurance and Pensions
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In this section:
- Isle of Man Offshore Business Sectors
- Isle of Man Commercial Trading Companies
- Isle of Man Investment and Fund Management
- Isle of Man Banking
- Isle of Man Trust Management
- Isle of Man Ship Management and Maritime
Isle of Man Insurance and Pensions
See Offshore Business Review
Insurance for a more general treatment of captive
Companies carrying out insurance business in or from the
Isle of Man are required to be authorised under the Insurance
Act 2008. Regulations made under this Act provide for detailed
supervisory reporting requirements. This Act consolidates
most of the existing primary legislation in relation to
insurance regulation, including the Insurance Act 1986,
the Insurance Amendment Act 2004 and the Insurance Intermediaries
(General Business) Act 1996. However, Part 2 of the Insurance
Amendment Act 2004 will remain in place and this Act will
be renamed the Life Assurance (Insurable Interest) Act 2004.
Domestic insurance business is largely carried on by 'permit-holders',
being foreign companies, mostly UK insurers.
'Captive' insurance companies are normally incorporated
in the Isle of Man and are authorised and supervised by
the Insurance and Pensions Authority (IPA). There are quite
comprehensive annual reporting requirements.
Effective 1st April 2006, all IOM captives became liable
for tax; however the tax rate is zero per cent.
Insurance companies are required to satisfy the Supervisor
that the company will be properly managed in the Island
and will have adequate financial resources and reinsurance
support for the business to be undertaken.
The captive insurance sector has been quite successful
in the Isle of Man, if not quite matching Guernsey. At end-March
2011 there were 140 captives and 16 long-term (life) companies
on the island. According to the Insurance and Pension Authority's
annual report for 2010/11, non-life sector funds under management
for the year ended 31st December 2010 fell, finishing at
GBP5.4 billion, 8% lower than the prior year figure of GBP5.8
billion. For the most part, entities within the Isle of
Man’s non-life sector, predominantly captive insurers,
tend to maintain a conservative asset mix that is high in
cash and cash equivalents.
Rent-a-captives are permitted; and in 2001 the findings
of a detailed review of developments in Protected Cell legislation
conducted by the Insurance and Pensions Authority prompted
the Isle of Man Treasury to extend proposed Protected Cell
Companies legislation to companies in general. PCC legislation
is particularly relevant to captive insurance business,
but the IPA review has led the Treasury to believe that
there may be opportunities for it to be used by other types
PCC legislation was included in the Companies (Amendment)
Bill 2002, and in 2004 the FSC promoted regulations which
to allow the use of PCC structures for international collective
The regulations provided for funds constituted as International
Schemes including Experienced Investor Funds and Professional
Investment Funds (but excluding Exempt International Schemes)
in the Isle of Man to incorporate as, or convert into, protected
It is expected that the PCC concept, which provides statutory
segregation through partitions (cells) within a company
into which separate assets may be placed, will be of particular
value for schemes which have a series of sub-funds.
The liabilities of each cell are legally ring-fenced under
Isle of Man law and cross contamination of cells is prevented,
giving protection from risk arising from gearing, or otherwise,
in other cells.
The Protected Cell Companies (Prescribed
Class of Business) (Collective Investment Schemes) Regulations
2004 came into effect on August 1, 2004.
In August, 2004, the Isle of Man Insurance and Pensions
Authority (IPA) introduced new regulations which allowed
bodies other than limited companies to carry on insurance
business in or from the Island.
The Insurance (Limited Partnerships)
Regulations amended the Insurance Act 1986, and the Insurance
Regulations 1986, to allow limited partnerships to carry
on insurance business.
The new regulations attempted to introduce a regulatory
framework for limited partnerships that mirrored that already
established for limited companies.
In late 2007, the Isle of Man confirmed that it was set
to enhance its challenge for the world's captive industry
business, and announced the end of the first stage of the
strategic review of the Island's captive insurance industry.
The Incorporated Cell Companies Act was signed and announced
by Tynwald on December 14, 2010.
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The Bennet Report
The Bennet Report, a review of the Isle of Man's insurance
and captive sector, prepared by ex-AIRMIC Chairman, Norman
Bennet, has been completed and presented to industry and
government representatives on the Island. It identified
the requirements to re-position the Isle of Man as the jurisdiction
of choice over competitor domiciles.
Derek Patience, chairman of the Manx Insurance Managers
Association (MIMA) on the Isle of Man, commented on the
Report: "We are delighted with the on-Island support
we have received so far on the Bennet Report. The Report
highlights the strengths of our already well-established
insurance and captives industry, but emphasises that in
order for us to move ahead of our competitors, we need to
renew our focus and raise our profile."
John Spellman, head of Isle of Man Finance, added: "We
are already a dominant player in insurance for the life
sector and it is now time to up the ante in the captive
insurance sector too. The offering of modern regulation,
sophisticated infrastructure and a zero percent tax regime
will prove more than a formidable challenge to other more
The Report was received with interest by the Isle of Man
Finance Strategic Group, which had detailed implementation
plans drafted to meet legislative and fiscal plans for 2008.
The recently introduced Insurance Act 2008 consolidated
most of the existing primary legislation in relation to
insurance regulation. The Act seeks to ensure that senior
management and controlling parties of insurance businesses
are fit and proper, and that the companies are financially
sound. The legislation is clear and comprehensive and the
reporting requirements it contains satisfy the IPA's strict
supervisory needs. Insurance business is principally governed
by the 2008 Act and the Insurance Regulations 1986.
Having received Royal Assent, the Insurance Act 2008 came
into operation on December 1, 2008 with the exception of
a few minor aspects.
The Insurance (Valuation of Long Term Liabilities) Regulations
2007, have effect for periods ending on or after March 31,
2008. The Regulations set out valuation and disclosure requirements
for long term insurance liabilities for regulatory reporting
purposes. These Regulations, which were made under now-repealed
legislative provisions, continued to have effect following
the implementation of the new Act. According to the IPA,
a further exercise to consolidate these regulations will
be carried out in due course.
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Isle of Man International Pensions Legislation
During 2000 and 2001 the Isle of Man put in place a series
of pieces of legislation aimed at creating a favourable environment
for tax-effective retirement schemes for individuals and companies.
First, Tynwald established the Isle of Man Insurance and
Pensions Authority, and in October 2000 the Island passed
the Retirement Benefits Schemes Act 2000 (RBSA 2000), a
core piece of Legislation which established a broad pensions
framework for all schemes operating in or from the Isle
of Man. As a further evolution, and in consideration of
the fact that domestic and international markets are entirely
different from both a regulatory and a marketing perspective,
the Insurance and Pensions Authority decided to develop
market-specific legislation subordinate to RBSA 2000 by
creating separate "international" and "domestic"
regulations under the main Act. This "umbrella"
approach (ie. the ability to address home and overseas markets
within one overriding Act) is entirely consistent with the
new "level playing field" approach to regulation
that is being adopted within the Island.
Late in 2001 the Authority put in place a framework to
enable the creation of authorised international retirement
benefits schemes in the Isle of Man. The Retirement Benefits
Schemes (International Schemes) Regulations enable the Isle
of Man to strategically enter the global pensions market,
a market of increasing importance within the international
financial services industry. The International Regulations
are now embodied within the Retirement Benefits Schemes
(International Schemes) Regulations 2001, and took effect
from January 2002.
The Authority sees the introduction of the international
regulations as an opportunity for Manx Companies to capitalise
extensively on pensions trustee, and pensions investment
and administration business - particularly as the Island
is home to highly skilled legal, trust, insurance, corporate
and fund administration industries.
The International Regulations prescribe that all schemes
established on the Isle of Man in respect of non Island
based employees are operated by appropriately approved and
registered trustees and administrators, and specify the
information that must be provided to members of such schemes.
Additionally, they set out rules regarding the management
and reporting requirements associated with international
retirement benefits schemes.
The overall objective is to provide suitable protection
for members and beneficiaries, which the Insurance and Pensions
Authority sees as its primary regulatory responsibility.
However, having achieved this objective, the Authority has
avoided being too prescriptive regarding the way in which
schemes are constructed, or the precise format or dates
at which benefits can be taken by members. This enables
scheme rules to be adapted to take into account bespoke
jurisdictional or corporate requirements, which should assist
scheme construction for certain global markets.
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New Pension Arrangements
In 2010, the Isle of Man’s parliament approved an
order creating a new type of pension arrangement that adds
to the Island’s existing local and international pension
legislation, reinforcing the Isle of Man’s reputation
at the forefront of international pension provision.
Following a six-month review by HMRC, the new pension arrangement
under section 50C of the Isle of Man Income Tax Act was
accepted into the UK’s Qualifying Recognized Overseas
Pension Schemes (QROPS).
According to the Manx government's Department of Economic
Development, the new pension scheme can only be provided
by registered Isle of Man resident pension providers who
are regulated by the Isle of Man’s Insurance and Pensions
Authority. As such, investors in these schemes can be assured
that they are operating in a well-regulated jurisdiction.
In addition to providing a new retirement savings option
for Island-based members, the possibility of QROPS status
for pensions approved under this new arrangement gives the
Isle of Man’s pension sector increased opportunities
to market these schemes to British expatriates who have
retired outside the UK.
As well as having the ability to utilize pension drawdown
applicable to Isle of Man personal pension schemes, a lump
sum of up to 30% of the fund is available. Any payment made
from the new scheme to a non-Isle of Man resident will be
paid gross and will not be subject to Isle of Man income
Minister for Economic Development, Allan Bell commented:
“This new pensions regime shows that the Isle of Man
continues to be the leading jurisdiction for professional,
innovative, well-regulated pensions. I am sure this will
be welcomed by the Isle of Man pensions industry and will
enable them to increase the amount of business placed in
the Isle of Man."
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Isle of Man Information: Business, Taxation and Offshore