New Insurance Opportunities Post-Brexit

The passporting arrangements and the cross border agreement between Gibraltar and the United Kingdom creates new opportunities for Gibraltar’s insurance sector. 

Motor insurance 

Today Gibraltar has more than 25 motor insurers and collectively these motor insurers have a market share greater than 20% of the United Kingdom motor insurance market. Around one in four UK motor insurance policies are provided from Gibraltar. Gibraltar is keen to build on its success and to ensure it continues to be a major player in motor insurance sector as the motor industry develops and adapts to changes in consumer demand for hybrid, electric and ride hailing vehicles and for autonomous vehicles in the not too distant future.  

Run-off insurance

For a number of years we have believed that Gibraltar has the potential to develop into a run-off insurance or legacy hub. In March 2019 the United Kingdom Government published a Statutory Instrument “The Gibraltar (Miscellaneous Amendments) (EU Exit) Regulations 2019” which is an important step forward for Gibraltar’s ambitions in this area. Subject to Brexit finally occurring, professional services firms that advise their clients on Part VII transfers will be able, with certainty, to include Gibraltar as a potential home for such transfers. 

Gibraltar has one legacy insurer that has completed portfolio transfers from Ireland and France and we are keen to attract more businesses to establish run-off operations in Gibraltar. The compelling reasons that have allowed Gibraltar’s motor insurers to flourish apply equally well for run-off or legacy insurers. 

Managing General Agents 

Managing General Agents or MGAs are currently authorised under Gibraltar’s insurance intermediaries regulations. Gibraltar is currently looking at a number of new initiatives that would enhance the attraction of establishing a MGA in Gibraltar. These changes are being discussed with the Gibraltar Financial Services Commission.  

Such changes are being considered to make Gibraltar more attractive to new MGAs but there is no intention of diluting the current requirements for MGAs to clearly demonstrate that mind and management is always in Gibraltar. The compelling reasons that have allowed Gibraltar’s insurers to flourish apply equally well for MGAs. 

Insurtech 

In January 2018 Gibraltar became the first country worldwide to introduce regulations for businesses using the Blockchain that store or transfer value on behalf of third parties. As a result Gibraltar is rapidly developing as a Fintech hub. 

Gibraltar is already home to a number of insurtech businesses but we would like to attract more insurtechs. The use of cutting edge technology that has enabled Gibraltar’s motor insurers and online gambling companies to flourish clearly demonstrates the credentials for Gibraltar to develop as a larger insurtech hub and the proposed changes to Gibraltar MGAs should be well received. As many insurtechs begin to evolve from technology start-ups to actively underwriting we believe that Gibraltar MGAs offer a compelling structure for Insurtechs to consider.

Life Insurance 

Historically Gibraltar’s life insurance sector has been small compared to its non-life insurance sector but Brexit offers the potential to change those dynamics. 

There appears to be general consensus within the insurance sector that the United Kingdom should seek Solvency II equivalence with the European Union as quickly as possible post-Brexit. As a Solvency II jurisdiction Gibraltar would also be included in any such agreement in a similar way that it has been included in the new insurance agreements between the United Kingdom and Switzerland and the United Kingdom and the United States of America. 

As a Solvency II equivalent jurisdiction Gibraltar would continue to be distinct from Guernsey, Jersey or the Isle of Man and unlike these other domiciles Gibraltar could become a centre for the repatriation of life policies that UK policyholders have taken out with European life insurers over the last 20+ years.  

Solvency II equivalence together with Gibraltar’s protected cell company legislation would offer a compelling proposition to attract new life insurance business to Gibraltar.