Gibraltar: Insurance in Gibraltar

Gibraltar's laws are ideal for the establishment of an insurance company. It is within the EU and has fully implemented EU directives on insurance making it possible for Gibraltar to establish not only captive insurance companies but also direct insurance companies which can write business directly into any EU Member State.

Gibraltar's financial services are regulated by the Financial Services Commission established pursuant to the Financial Services Ordinance in accordance with EU requirements. The Commission, and in particular the Insurance Superviser, supervises insurance business.

The Commission has made it clear its intention to encourage the establishment of reputable insurance companies in Gibraltar.

A captive or direct insurer set up in Gibraltar may apply for tax exempt status paying an annual exempt tax of £225 and no more. This compares very favourably when compared with Luxembourg and Ireland (Dublin), two EU member states offering favourable tax incentives and priveleges. In Luxembourg there is a 26% corporate tax liability and in Dublin a 10% corporate tax rate. The cost of establishing and maintaining an insurance company in Gibraltar is also favourable.

A Gibraltar insurer may apply for tax exempt status which means it will pay £225 per annum and no more on its profits. An insurer may alternatively, if for company or tax reasons it considers it preferable, apply for qualifying status which means it may negotiate a tax rate of between 2% and 35% on profits per annum.

The costs of incorporating an insurance company depends on the authorised capital of the company. Duty of 0.5% of the authorised capital is payable on incorporation.

A licence application is made to the Financial Services Commission. An initial fee of £500 is payable and thereafter an annual fee of £2,000.

The Commission will only issue a licence if it is satisfied that the company will carry on the insurance business with integrity, prudence and with the professional skills necessary for the range and scale of the business undertaken. A licensee will need to satisfy the Commission of:

• The manager's expertise, skill and experience
• It's ability to adhere to prescribed EU guidelines including solvency margins and guarantee fund levels.
• It has proper insurance arrangements in place.

No minimum share capital is specified in the legislation but the Commissioner will need to be satisfied that the company has adequate financial resources to support its business plan and the required minimum guarantee fund which will depend on the class of business written in accordance with EU requirements. General liability insurance would require 400,000 ECUs, Fire, Personal accident and Property damage 300,000 ECUs.

In the case of a company whose business in Gibraltar is restricted to reinsurance, the minimum guarantee fund for long term or general business will be 50% of the above mentioned amounts. In the case of a pure reinsurer which is the wholly owned subsidiary of an insurer carrying on long term business to that ceded by the insurer its minimum guarantee fund would be 200,000 ECUs.

The Commissioner is responsible for the on-going supervision of insurance companies and requires a licensed insurance company to:

• Maintain at all times a place of business in Gibraltar
• Maintain property insurance and accounting records in Gibraltar
• Submit to the Commission financial statements within six months of the end of its financial year
• Maintain solvency margins and minimum guarantee funds
• Obtain approval of any change of directors, managers or controllers of the company

• Gibraltar is within the European Union and may write insurance business direct into EU member states
• EU insurance directives have been fully implemented
• No taxes are payable in Gibraltar
• Favourable establishment and operating costs
• No Insurance Premium Tax is payable in Gibraltar
• Local insurance, legal, accountancy and banking expertise
• Fully regulated by the Financial Services Commission in accordance with EU directives

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.