Insurance In Guernsey – A Year Of Celebration

The centenary is an important achievement to recognise given the importance of the captive sector today. Generally, the accepted narrative is that there has been an established finance industry in Guernsey since the 1960s, so we are delighted to have been able to trace our history back further than that and demonstrate that specialist insurance services have been conducted here for 100 years.

Guernsey’s captive industry has historically proven itself capable of providing solutions to new and changing risks, and will continue to rise to these challenges.

The opportunities represented by a global finance centre such as Guernsey via the insurance market were clearly appreciated many years before what is commonly accepted as the beginning of modern finance.

WE ARE GUERNSEY, the promotional agency for the island’s specialist finance industry, has worked with GIIA to produce a celebratory magazine to mark the occasion. The publication takes a deep dive into the history of CICL, how captives have evolved over the decades, and what the future may hold for the industry.

The research that went into this project unearthed some fascinating stories and artefacts, and the articles take the reader through the sector’s journey from 1922 through to the present day.

Those artefacts include the original registration document, held by the Guernsey Registry. And by a stroke of pure luck, the original CICL company seal that was used to certify the original registration document has been retained by Aon, which took over the management of CICL when it acquired Hogg Robinson in the 1990s.

You can access the full magazine here.

Among our modern finance industry, captives are the ‘senior service’ of finance and remain a key contributor to Guernsey’s prosperity as well as a valuable source of innovation, which has been copied around the world through the development of novel, award winning international transactions and even new types of company.

Captives in Guernsey, and the professional services industry which supports them, is still evolving and punches well above its weight on a global basis. Its expertise and that of its highly skilled personnel has been exported to many other nascent insurance jurisdictions.

PCCs

Another milestone that our insurance industry marks this year is the 25^th anniversary of Guernsey’s world-leading protected cell company (PCC).

The Protected Cell Companies Ordinance 1997 came into effect in February 1997 for Guernsey’s captive insurance sector and was the first cell company legislation of its kind anywhere in the world. The subsequent success of this innovation is illustrated by the fact it is now used across the financial services world as an alternative application for the structuring of many different types of products.

Aon’s White Rock Insurance Company PCC Limited, which was established in Guernsey in 1997 as the first PCC in the world, has now been used by more than 100 corporations as a cell captive facility and has grown to be the largest structure of its kind globally.

Guernsey’s cell company expertise has been evidenced regularly since the PCC’s introduction, including a worldwide first in 2010 with the amalgamation of two PCCs – with 17 cells between them – into one. In the funds industry, Guernsey also hosted the first-ever conversion of a PCC to an incorporated cell company (ICC) during a process which created the world’s largest ICC mutual fund.

The concept has been copied by finance domiciles across the world, with thousands of PCCs and cells employed across the insurance, funds and private wealth sectors.

Innovation is at the heart of Guernsey’s financial services offering and the PCC is a perfect example of how Guernsey contributes on a global scale. It was hailed as one of the most innovative insurance solutions to be introduced to the captive and alternative risk transfer markets and cemented our position as Europe’s leading captive insurance domicile, but the structure is now an accepted mainstream option across all areas of the global finance industry.

Sustainability

We are also one year on from the introduction of GIIA’s world-first insurance ESG framework to include a kitemark accreditation for its members.

It aims to help member organisations manage ESG opportunities and risks, and to deliver positive ESG impact.

ESG-related criteria has moved from a peripheral concern to one that is front and centre of decision making. This framework acknowledges that we are a long way from agreement on a single standard for ESG in the insurance space, so it is an important first step on the journey towards recognising the work that Guernsey insurance entities do in achieving the UN’s Sustainable Development Goals (SDGs) and ensuring that ESG is at the heart of their governance structures.

The framework enables insurers and insurance managers who are members of GIIA to self-certify. The accreditation was launched in conjunction with Guernsey-focused environmental assessment company ESI Monitor, creating a kitemark which validates insurers’ considerations whilst minimising the impact on the environment and communities.

It follows the United Nations’ recommended approach of incorporating ESG processes to align its SDGs with the outcomes of financial services products, services and investments made by the insurer.

The framework sets out four pillars of requirement which must be fulfilled to comply with the framework:

• To embed ESG within the decision making and governance structure;
• The risks underwritten to contribute to achieving the SDGs;
• The investments held to contribute to achieving SDGs, and
• The insurer to publicly disclose how it has met the framework’s requirements.

ESI Monitor is providing a validation service for those who have signed up to the framework. It will review insurers' progress across its four pillars and ensure they have complied with its requirements.

We have already had a lot of interest of not only existing insurers looking at using it, but also new insurers coming to the island to take advantage of this clear framework. This is going to help them to not only think more about what they're already doing on this front, but also to demonstrate it because there will be a kitemark available to show compliance with the framework and meet the UN SDGs.

The first accreditation was awarded to Dunant Re IC Limited, an Incorporated Cell of Replexus ICC (Guernsey) Limited. The Red Cross-sponsored insurance bond was the first of its kind when it launched in March 2021. Dunant Re IC is the first humanitarian catastrophe bond covering pure volcanic eruption. US$3m was raised through specialist cat bond investors to cover the risk of 10 volcanic eruptions across three continents.

Guernsey is demonstrating how it can innovate and collaborate to stay at the forefront of sustainable finance. This is another important step towards a greener and more sustainable future for the global insurance sector.

Mark Elliott
Mark is the CEO of Polo Insurance Managers and Chair of the Guernsey International Insurance Association's Market Development Committee.