BI’s Article search uses Boolean search capabilities. If you are not familiar with these principles, here are some quick tips.
To search specifically for more than one word, put the search term in quotation marks. For example, “workers compensation”. This will limit your search to that combination of words.
To search for a combination of terms, use quotations and the & symbol. For example, “hurricane” & “loss”.
COLOGNE, Germany-Gibraltar's popularity as a captive insurance company domicile just received a shot in the arm.
Insurers, reinsurers and captive insurance companies based in Gibraltar can now write business across the European Union.
Gibraltar passed legislation governing cross-border trading in insurance business in February, but as a British territory had to wait for the U.K. Department of Trade and Industry to rule on the competence of its supervisory body, the Financial Services Commission.
The DTI last week said that it was satisfied that Gibraltar's regulatory system meets U.K. standards and Gibraltar could start accepting "single passport" insurance business.
Now, an insurance operation with its headquarters in Gibraltar can write direct insurance business in any E.U. country, under the supervision of the FSC, as long as it complies with the local insurance rules of the countries it is trading in. Furthermore, Gibraltar-based insurers can now establish branch operations in any of the E.U. member countries.
In an interview between sessions at last week's Risk Management & Risk Financing in Europe Conference in Cologne, sponsored by London-based Risk & Insurance Research Group Ltd., Gibraltar's Minister for Trade and Industry Peter Montegriffo said he anticipates that the new single passport option will strengthen the territory's financial services sector, one of its most important industries.
"Gibraltar has been regarded as a successful finance location for 30 years" for wealthy individuals, Mr. Montegriffo said. "We are now moving to the next phase-institutional work."
Because it has catered to individual clients, Gibraltar has no double taxation agreements with other countries.
Despite the current soft market conditions in the worldwide insurance sector, Mr. Montegriffo said Gibraltar will thrive as an insurance location. "I am intensely aware of the fact that it is an extremely competitive market," he said. "But there is still a need for insurance incorporations and captive insurance locations."
"There is a commitment on the part of the Gibraltar government that the standard of regulation in Gibraltar will be equal to U.K. standards, though it doesn't mean the methodology will follow the U.K.'s," said Mr. Montegriffo.
He disputed Gibraltar's reputation in recent years as a center for money laundering. In the 1980s and early '90s, financial scandals involving funds diverted through Gibraltar attracted attention (BI, April 14).
"Most of the criticisms were entirely unjustified," Mr. Montegriffo said.
In addition, relations with Spain, strained by a long dispute between Spain and the United Kingdom about Gibraltar's sovereignty-a potential stumbling block for some insurers-are "less antagonistic than people believe," he said, adding the issue is political rather than commercial. "The actual temperature on the ground is very friendly, with a lot of commercial interchange," he said.
Currently, 12 insurers and six captives operate from Gibraltar, where captive insurers are exempt from local taxation. As long as the company has no Gibraltarian shareholders or policyholders, the captive merely pays a flat annual fee of (British pounds) 1,000 ($1,638).
Captive management companies can enjoy "qualifying company" status, meaning they pay 5% corporation tax. Other qualifying companies can elect to pay between zero percent and 35% tax, a "flexibility" that Mr. Montegriffo said allows organizations to comply with controlled foreign corporations legislation-or to avoid appearing to operate in a tax haven.
Costs in Gibraltar are lower than in other jurisdictions, said Mr. Montegriffo, because there is an oversupply of office space and "a well-resourced workforce." Telecommunication costs are substantially higher than in other locations, but Mr. Montegriffo predicted those costs will fall as usage increases.
Insurance operations in Gibraltar will not have to meet any requirements on hiring locals.
Gibraltar even has a five-year renewable personal tax system for expatriates that taxes them only on the first (British pounds) 10,000 ($16,385) of income.
"We need more expertise in the insurance sector," said Mr. Montegriffo, "but we don't resist the importation of expertise. We recognize the need for international expertise to complement our own workforce."
The individual client focus in the past of Gibraltar's financial services sector has created a strong professional infrastructure of accountants and legal firms, which Mr. Montegriffo sees as an attraction for new operations.
Already, "three or four" organizations have applied to set up single passport operations in Gibraltar, two as direct-writing captives and one as a reinsurer. These applications were made in hopes that the DTI would approve Gibraltar's regulatory system.
Paul Savignon, managing director of Norwich Union Fire Insurance Society (Gibraltar) Ltd., said the applications had come from Germany, Italy and Luxembourg, the last one as a proposed redomiciliation of a current captive.
Redomiciliation is a potential source of new activity. Several mechanisms are being identified to smooth the redomiciliation process, with captives anticipated to be moving from locations around the world, particularly the Caribbean and Europe. Also, because most people in Gibraltar speak both English and Spanish, he anticipated a lot of interest from South America.
Already, Gibraltar has an established South American offshore financial services brokerage, and a reinsurance operation is "in the pipeline."
In the long-term. Gibraltar also will target United States and South Africa for new business.