The Guernsey Financial Services Commission has introduced a pilot scheme for the pre-authorisation of insurance cells.
The move, made in consultation with Guernsey insurers and the sector's representative body the Guernsey International Insurance Association (GIIA), offers a pre-authorisation scheme that permits just-in-time creation of captive cells in existing protected cell companies. The pilot is expected to run until the end of 2021.
Guernsey firm Artex Risk Solutions is reported to have already implemented a captive cell solution within 48 hours.
The GFSC commented: “We are happy to work with industry on this type of initiative in instances where it can be done without endangering policyholder protections.”
GIIA Chairman Mike Johns said: “This flexible approach to regulation enables brokers and their clients to react to adverse market developments right up until the renewal date. This will be an invaluable tool to enable buyers to increase their control over difficult renewals during the current hard market cycle."
The scheme applies to insurance-licensed PCCs owned by an insurance manager, and is available for captive cells writing a single line of general insurance business to meet an urgent business need.
It must meet the standard formula for minimum capital requirement and prescribed capital requirement, with no regulatory adjustments available.
Kate Storey (pictured), Partner at Walkers in Guernsey, who was involved, as part of GIIA, in the initiative, said: “We proposed this swift-authorisation regime in response to the huge increase in demand for captive insurance vehicles, particularly over the last 12 months, due to commercial insurers raising their rates and restricting available cover in the so-called hard market.
"Using a captive vehicle, a business can self-insure in a way tailor-made to its business, and more cost-effectively than through commercial insurers.
“Guernsey is already a global leader in the captives market and now offers the ability to set up and start writing insurance in as little as 48 hours on a pre-authorised basis, provided the documentation complying with the regime is provided to the Guernsey regulator within 14 days of commencement of business.”