John Batty Business development manager Isle of Man Finance
to innovate and achieve their corporate goals, whilst protecting the interests of relevant stakeholders and taking account of developing standards in international regulation. It seeks to achieve a suitable balance of those objectives that are relevant to the needs of insurers on the island and enables it to carry out its responsibilities of maintaining a secure and reputable business environment.
How has the island weathered the economic storm and is there a silver lining in sight?
The international downturn of the last 12 months has had an effect on
the global insurance industry, and while business has not been growing at the pace of recent years, the Isle of Man has weathered the storm well. We have enjoyed positive economic growth for 25 consecutive years, with an average of around 7 percent per annum over the last 10 years. While 2009/10 was affected by global economic factors, the budget is still in surplus and we expect GDP to continue to grow, albeit at rate of around 2.5 percent for the year.
The other major impact for all international financial and business centres has been the OECD report in 2009. This, together with the review into Crown Dependencies (The Foot Report), could have been viewed as being negative. However, the report has given us an opportunity to highlight our position as among the most stable, responsible and co- operative small countries in the world.
Around two years ago, most offshore jurisdictions were viewed as being essentially similar. The recent interest in these jurisdictions has meant that more analysis has been undertaken on the differences between them and we are pleased that this has given us the opportunity to highlight our strong track record of complying with international standards of financial regulation.
Our inclusion on the &#x2018;white list&#x2019; issued by the OECD represents a major endorsement of the Isle of Man and our long-term strategy of positive engagement with the OECD. The IMF also published its report on the Isle of Man last year. The report said that the island has a general high standard of financial sector regulation and supervision, and in relation to the insurance sector, that it is similarly well regulated, with &#x2018;considerable resilience against shocks&#x2019;.
In March 2004, protected cell company legislation was introduced and has been in place for a number of years now. How successful has this been in attracting new business to the island?
PCCs have tended to be aimed at the middle market of companies
that wish to take advantage of a captive solution in a highly cost- effective manner.
As such, PCCs are seen as an essential option within the captive insurance world, and we have been pleased with the number that have been set up since legislation was introduced. While we were not among the first jurisdictions to get off the starting blocks with this, we are certainly seeing an increasing number of enquiries.
Has incorporated cell company legislation been introduced yet and, if so, what has been the level of interest?
Following the success of PCCs, incorporated cell company (ICC)
legislation is currently being formulated and we expect it to be available very shortly. This will enhance the island&#x2019;s offering to the insurance sector and we expect this to lead to an increased number of captive formations in the years to come.
During 2007, the Isle of Man Captive Association and Isle of Man Finance commissioned an independent strategic review of the island&#x2019;s captive insurance sector. What were the key findings of this and what has changed since?
The review was commissioned towards the end of 2007 and reported
in 2008. A strategy was designed to implement the findings of this review and is currently being updated to take into account the positive outcomes of the various reviews of international financial and business centres. The island&#x2019;s already excellent reputation as a pensions and life insurance centre is also leading to enquiries into the relatively new area of using captives for employee benefit provision.
In general terms, the Isle of Man has most of the ingredients in place for
it to become a leading insurance jurisdiction across the board. Positives being promoted include the low cost of doing business on the Isle of Man, a corporate tax position that does not seek to add to the taxation of the parent company, a qualified and available workforce, high-quality IT infrastructure, excellent working relationship between industry and regulator, and the innovative nature of the industry on the island. This is in addition to the excellent regulatory structure and the benefit of the Isle of Man&#x2019;s international reputation as a domicile of high integrity and compliance with international standards.
In addition, while the Isle of Man is known as a quality life insurance and captive insurance domicile, we are also in a very competitive position to attract reinsurance companies. At present, there are a small number of reinsurance companies on the island and this is expected to grow.
Areas for improvement suggested by the report were the introduction
of ICC legislation (currently being implemented) and the need for improved awareness of the Isle of Man as an insurance domicile.
How big is the overall Isle of Man insurance market and what are the prospects looking forward?
The insurance sector encompasses captives, general, reinsurance
and international life insurance and employs a total of just over 2,000 people. In 2009, it received over &#xA3;7.4 billion in premiums and had assets under management of over &#xA3;47 billion. Internationally, Isle of Man insurance companies have branches in the Middle East and Asia.
Moving forward, we are expecting growth in the next few years,
with particular emphasis on the captive and reinsurance sector. This will be at the core of our strategy and will be pursued in conjunction with the trade body, the Isle of Man Captive Association. We are confident that the Isle of Man will ultimately be recognised as the domicile of choice for new captive formations and for the redomicile of existing captives.
John Batty is business development manager at Isle of Man Finance. He can be contacted at: firstname.lastname@example.org
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