Isle
of Man Insurance and Pensions
See
Offshore Business
Review – Insurance for a more general
treatment of captive insurance companies.
Insurance
business carried on in and from the Isle of
Man is controlled by the Insurance Act 1986,
updated through the Insurance Amendment 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 Supervisor. Additional legislation
is contained in the Insurance (Amendment) Act
1995 (Redomiciliation of Captives). 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 application costs GBP1,000
and an additional GBP500 is payable annually
for renewal of the authorisation.
The
captive insurance sector has been quite successful
in the Isle of Man, if not quite matching Guernsey.
In
mid-2005 there were over 170 captives and 19
long-term (life) companies on the island with
assets exceeding GBP23 bn and annual premium
income of about GBP4.5bn.
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 (IPA) 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 of companies.
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 investment schemes.
The regulations provide 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 cell companies.
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
FSC stated.
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
1st August 2004.
In
August, 2004, the Isle of Man Insurance and
Pensions Authority (IPA) introduced new regulations
which allow bodies other than limited companies
to carry on insurance business in or from the
Island.
The Insurance (Limited Partnerships)
Regulations amend the Insurance Act 1986, and
the Insurance Regulations 1986, to allow limited
partnerships to carry on insurance business.
The new regulations attempt to introduce a regulatory
framework for limited partnerships that mirrors
that already established for limited companies.
The new regulations became effective from the
beginning of August.
In
late 2007, the Isle of Man confirmed that it
is 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
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 identifies 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 crowded locations."
The
Report has been received with interest by the
Isle of Man Finance Strategic Group, with detailed
implementation plans currently being drafted
to meet legislative and fiscal plans for 2008.
BACK
TO TOP
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
& 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 &
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.
Mike
Lightfoot, the Authority's Marketing Executive
(Pensions) clarifies that "The Authority
has spent a great deal of time developing the
framework to ensure its fit with the market,
and as part of this process we have consulted
extensively with the pensions and financial
services industry both within the Island and
elsewhere. As a consequence I firmly believe
that we are in the right place at the right
time with what we have to offer, and this has
been reinforced by the response that has already
been received from many parts of the world".
He
continues "We have focussed very much on
our role as prudential regulator and the need
for us to ensure that all schemes authorised
by the Authority provide suitable protection
for members and beneficiaries, in addition to
making sure that we have reached the right balance
between providing the market with a large degree
of flexibility in scheme construction, and establishing
our core Regulatory controls.
"Given
that we are looking at a global market, the
ability for schemes to be tailored to suit multi-jurisdictional
requirements is a highly attractive feature
of our infrastructure. We have already been
involved in discussions with multi-national
companies who feel that the Island has a great
deal to offer in this area."
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
& 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.
BACK
TO TOP
