Thursday, 17 May 2012
Guernsey made right decision to avoid ‘disproportionate demands’ of SII—Aon
Guernsey’s decision not to apply for equivalence under Solvency II is having a positive impact on its status as the leading European offshore captive destination because the capital adequacy regime still does not reflect the needs of, and proportionate risk posed by, captives, according to Aon.
Guernsey
The island’s decision to rather comply with capital requirement standards laid down by the International Association of Insurance Supervisors (IAIS), which many captive owners believe to be sufficient, leaves it with a healthy regulatory environment for alternative risk financing vehicles, said Paul Sykes, Managing Director of Aon Insurance Managers (Guernsey) Ltd.
Speaking at a Captive and Insurance Master Class organised by Aon in London this week, Mr Sykes argued that “the Solvency II regime so far has shown a profound disregard for industry and corporations that exercise prudent risk management by owning and operating captive insurance companies.”
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“Guernsey complies with standards laid down by the International Association of Insurance Supervisors (IAIS), and its compliance is assessed by the International Monetary Fund. While the capital requirements of Solvency II may be appropriate for commercial insurers who are dealing with the general public, many captive managers and owners believe the IAIS international regulatory standards will be sufficient for most traditional captives,” he continued.
According to Aon the number of insurance licenses issued in Guernsey in 2011 increased as the implications of compliance with Solvency II became better understood by captive managers and owners.
In complying with IAIS standards the island offers a ‘robust and rigorous regulatory environment, which is responsive to innovation while not forcing captives to adhere to the disproportionate demands and excessive capital requirements of Solvency II,’ continued Mr Sykes.
“Aon is committed to Guernsey. We are actively advising new and existing captive insurance company clients to help them achieve better capital efficiency and cost savings through restructuring their insurance programmes,” concluded the Aon man.
Guernsey is the 3rd ranked global offshore domicile for captives with 8% placed on the island, according to figures from Marsh’s Global Captives Benchmark Report 2012. It trails Bermuda, which attracts 54% and the Cayman Islands with 26%.
It is the home of 32% of all EMEA-owned captives, only beaten by Bermuda with 45%. The Isle of Man accounts for 20% of the EMEA-owned vehicles.
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