Nigel Woodroffe reports on Jersey's insurance/captive development to date.
In last year's article I announced, in the wake of the new Insurance Business (Jersey) Law in October 1996, Jersey's plans to develop as a full service insurance centre, able to undertake all forms of insurance business. This has now become a reality, and almost 11/2 years since the Insurance Law was introduced, Jersey has made an encouraging start.
One of the most positive features of the new law, and one which makes it attractive to companies wanting to set up business in Jersey, is the removal of the previous restrictions which were prevalent under the original 1983 law. For the first time, companies in Jersey are now able to carry out third party business, particularly life and pensions business, not just captive and reinsurance business.
In 1996 we were confident that the new law, combined with the professional infrastructure of Jersey's whole finance industry, as well as the "personal service" which the insurance division at the Financial Services Department can provide to companies considering the establishment of an offshore operation, would combine to attract new insurance business to Jersey. Although it is still early days in the full development of the insurance division and its services, this confidence is paying dividends.
The first few months of 1997 were spent identifying and registering the category A insurance companies (those authorised and supervised in another, acceptable jurisdiction) who are carrying on insurance business in Jersey. The number of permits issued to date is 162, comprising companies not just from the UK, but also from continental Europe (eg Belgium, France, Italy, Netherlands, Switzerland and the Republic of Ireland), and from further afield (Canada, USA and South Africa).
In addition there are now 14 category B permits (offshore insurance companies registered in Jersey). This may not appear to be a large number when compared to some other offshore jurisdictions, but in the context of a limited timescale and the island's policy of licensing only businesses of quality and stature, it is an encouraging start, indeed the number of enquiries to which the department is currently responding is very positive.
Among the first British insurance organisations to be granted a licence under the new law was Edinburgh based Scottish Widows, the UK's eighth largest provider of pensions, life and unit trust products. The establishment of Scottish Widows International Ltd in the island was regarded by the parent group as a major strategic initiative to expand its business horizons internationally. At present, Scottish Widows' customer base is essentially confined to UK residents. Products can in future be sold around the world.
While building up the division, we have endeavoured to communicate with the industry itself. This has been achieved in a number of ways, mainly through media commentary but also through presence at international conferences and exhibitions such as AIRMIC, the Annual Insurance and Risk Management International Conference, held annually in the UK, the RIMS conference (Risk and Insurance Management Services) held in San Diego in the last week of April, as well as supporting a Jersey Offshore Insurance Association seminar held in Jersey, to inform the local business community of the insurance services now available in the island. Jersey has also become a member of the International Association of Insurance Supervisors and of the Group of Cross Border Insurance Supervisors.
During the next 12 months, our aim is to listen to the industry we are aiming to serve, in order to build on the progress made so far in terms of category B permits being issued and of insurance business coming to Jersey.
In summary, the island's revised legal and regulatory structure now enables Jersey to provide a cost-efficient and tax-efficient base for all branches of insurance and reinsurance activity, including life assurance and pensions business. It also means that Jersey is well placed to meet the needs of a wide range of businesses.
The promotion of Jersey as a key location for offshore insurance and for the regulation of insurance business will also shortly be enhanced by the impending establishment of an independent Financial Services Commission, which will come into effect in the summer of this year.
There are few jurisdictions that can compete with Jersey's stability, security, respectability, flexibility and quality, and for the future Jersey is fully confident that it can develop its insurance sector, and maintain its leading position as an international finance centre well into the 21st century.
Nigel Woodroffe is deputy director for insurance business at the Financial Services Department at the States of Jersey. He joined the Department on 1 October 1996 to head up the newly created insurance division which was launched in conjunction with the coming into force of the Insurance Business (Jersey) Law 1996.