There are a whole stack of advantages for insurtech when it comes to locating your corporate HQ in Gibraltar. Yes, the weather is better and the corporation tax is less too. But there is so much more in terms of advice and support when growing your brand. IE chatted with Albert Isola, Minister For Digital, Financial Services & Public Utilities in Gibraltar (pictured) to find out more.
IE; Albert, please give our readers some background on Gibraltar and the growth of the insurance sector there.
AI; It’s something that’s been growing since the 1960s, although the pace definitely picked up from the early 2000s onwards. As many people know in the world of insurance we are especially strong as regards motor insurance brands, with probably about 25% of the entire UK motor premium market moving through companies based here.
But in the last few years, particularly after Brexit, we are now looking at the wider insurtech sector because the world of insurance is very different than it was say back in 2001. It is a much more technology based industry now and Gibraltar’s approach reflects that, in every way. In 2019 we passed a Finance Act which consolidates a great deal of EU rules and regulations, plus simplifies matters like passporting and corporate governance for insurance companies located here.
More importantly for insurtechs there is plenty of support to help make their growth both rapid and compliant too. For example there is a Fintech hub, a local Insurance Institute and the services of an Insurance Manager if needed. All these things can really make a difference for fast-growing insurtechs.
IE; I was looking at the Insurance Manager scheme on the government website earlier, it must be a useful feature for insurance brands looking to make the Gibraltar move for the first time.
AI; Yes absolutely, in the past an Insurance Manager could only be appointed by an insurance company, but under the new rules this also applies for MGAs. The role of the Manager is key in bringing the company together with the Gibraltar regulatory authority and there is a real value in having that expertise. As regards location, some insurance brands prefer to outsource certain functions and these can, subject to regulatory approval, be located in the UK.
The advantage for insurtechs for example is again, all about scaling up a fast-growing business. The compliance, accounting and many other corporate functions can be handled by the Insurance Manager, while the insurtechs get on with creating the exciting stuff, like new products.
IE; Capital rules and Solvency are other things worth noting by smaller MGAs or insurtechs too?
AI; MGAs and smaller insurtechs will be authorised under our insurance intermediary category. Gibraltar is always going to have checks and balances in place to make sure any company located here is solvent of course, not just three months capital – the minimum
requirement – but a bit more. Larger insurtechs like Zego and Marshmallow that have established insurance companies in Gibraltar have had to meet the full Solvency II capital requirements plus a decent solvency margin.
We want those insurance businesses to grow securely of course and part of that equation is the Gibraltar Authorisation Regime or GAR which enables the UK and Gibraltar to establish common rules on insurance regulation and enforcement.
Our ethos is to also act as a very supportive hub for insurance brands, we want to see companies grow step-by-step. This all takes talent for sure, but also working capital so what you don’t want to see is companies that are constantly fundraising every few months in order to move forward. I don’t think any regulator wants to see that process happening, because we all need stability in financial services.
There is some way to go as regards the UK and the EU negotiating long-term financial rules of course, so this is another good reason why insurtechs or MGAs should have a conversation with us in Gibraltar. Our position is that we want a compliant regulatory regime with both the UK and the EU.
IE; Was 2020 a busy year for Gibraltar’s financial services sector?
AI; One of the very busiest, during the last 6 months of 2020 I think we had more applications to locate here than in the previous two years. You know it’s great to see a company like Zego here because when you speak to them you get a sense of how they really have a different approach to solving traditional insurance problems. For Gibraltar it is great to attract companies who are developing new digital products.
IE; Do you think electric and connected vehicles are going to change the motor insurance market, and in turn, will that an effect on Gibraltar’s insurance sector?
AI; It is something that we are looking at in Gibraltar with interest because there is no doubt that electric cars and other electric vehicles are going to be a big part of the market in the near future. From Gibraltar’s perspective as a home to insurance brands we hope to see the most innovative companies making their home here and of course we intend to make sure that regulation keeps pace with innovation.
In the end, technology is a much bigger change than something like Brexit, so what we want to do is help insurance brands get products to market faster, but with all the right checks in place. It’s also important that we help insurtechs near the start of their journey and support them as they adapt and grow. Gibraltar can be more agile, much more flexible than some other jurisdictions and that will help the new insurtechs develop the right products for that EV market.
The other thing worth mentioning is that we have started a consultation on the use of blockchain technology is all aspect of financial services, including insurance. It’s important to be forward- looking and understand how new technology can help make processes more robust, as well as speed up claims or policy administration and so on.
IE; Interesting times ahead, thank you Albert.
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