Applying for a permission

Insurance Company

About

The purpose of this page is to make sure that the application process is fully understood.

This section sets out:

  • What Insurance Companies are and what this regulated activity would allow you to do
  • Authorisation Process
  • New Cell
  • Capital Requirements
  • Additional Information
  • What are Insurance Companies and what would this regulated activity allow you to do?

Insurance companies are corporate entities that accept the transfer of a risk of loss from an entity, either a private individual or a business, in exchange for a payment (the premium).

Insurance companies may choose to specialise in specific classes and types of customers or pursue a broader strategy. Insurers may also decide to offer their products in other EU jurisdictions, on either a Freedom of Services or a Freedom of Establishment basis, utilising their Gibraltar permissions.

Expectations of New Insurance Companies

In order to provide clarity to applicants, we have set out our expectations of new insurance companies and high-level areas of focus when considering applications for new insurance companies and material changes to business plans.  

The GFSC’s Authorisations Policy Paper regarding the above is available here.

Examples of types of analysis we conduct

  • A new motor insurer is applying to be authorised with £6 million of solvency capital.  A simple stress test might be that there is a claim that results in a large PPO within the first 24 months of operation.  Depending on the reinsurance structure and quality, could it cope with a large PPO award?  What is the impact on capital?  
  • A new insurer is planning to write in a niche market, and is projecting a loss ratio lower than for the market as a whole.  What is the justification for the loss ratio in the business plan?  What data sources have been used?  What controls are there for monitoring the loss ratio once live?  
  • A new insurer proposes writing business in a country with an unusual legal system.  What experience does the Board / executive have of the market in that country?  How will they monitor business performance?  
  • A new insurer plans to source business via an MGA.  How will the MGA be monitored against the contract with the insurer?  How will the insurer monitor customer outcomes for administration and claims handling?  What will the data flows be from the MGA to the insurer?  

Authorisation is required for each class of business that the Insurance Company intends to transact. The classes are as follows:

Classes of Non-Life Insurance

  1. Accident.
  2. Sickness.
  3. Land vehicles.
  4. Railway rolling stock.
  5. Aircraft.
  6. Ships.
  7. Goods in transit.
  8. Fire and natural forces.
  9. Damage to property.
  10. Motor vehicle liability.
  11. Aircraft liability.
  12. Liability for ships.
  13. General liability.
  14. Credit.
  15. Suretyship.
  16. Miscellaneous financial loss.
  17. Legal expenses.
  18. Assistance.

Classes of Non-Life Insurance

  1. Life and annuity.
  2. Marriage and birth.
  3. Linked long term.
  4. Permanent health.
  5. Tontines.
  6. Capital redemption.
  7. Pension fund management.
  8. Collective insurance etc.
  9. Social insurance.

The authorisation of an Insurance Company, unless otherwise expressly restricted, permits the transaction of reinsurance. Reinsurance is the acceptance of insurance risks from another Insurer but only in classes for which the Insurance Company is already authorised.

 

Application process

Applicants should submit an application form and additional documentation with all relevant documents. We will not consider an application complete if there are any outstanding documents.

The application pack must consist of:

  • Application Fee;
  • Application Form;
  • Solvency Capital Requirement forecast submitted on a “best-endeavours” basis. The firm’s figures should reflect their projected risks over the next 3 years as a best estimate and ensuring that there is sufficient capital assessed against the type of firm. This is in accordance with the technical standards published by the European Insurance and Occupational Pensions Authority (EIOPA) in April 2014.
    • Stress Test on Financial Projections;
    • Profit and Loss account;
    • Balance Sheet
  • Regulated Individual Form (for each Regulated Individual);
  • Controller Form (for each Controller);
  • Business Plan;
  • Conduct Risk Framework;
  • A scheme of operations in accordance with Article 23 of the Solvency II Directive;
  • Details on how the firm complies with the system of governance referred to in Chapter IV, Section 2 of the Solvency II Directive;
  • Risk methodology and/or threat assessment matrix; 
  • Mapping assessment of how the application meets the relevant legislative threshold requirements (i.e. statutory/regulatory criteria for licensing under relevant Act); and
  • Any other document the applicant considers the GFSC should take into consideration as part of the application.

Please request cloud access via E-mail at authorisations@gfsc.gi  in order to submit the Application Pack. Please include the following information in the subject field: ‘Name of Regulated Firm/Applicant – Application’. Paper copies are not required unless indicated by the Authorisation team.

Please note that we accept signed signature copies sent via e-mail and electronic signatures, which must originate from the Regulated Firm /Applicant’s domain.  

 

Additional Services

Regulated Firms that are already authorised by the GFSC may apply to extend their permission to provide additional financial or professional services. If you are seeking authorisation for additional services, please contact the Authorisation team in order for us to determine what documents required for submission.

The below sets out an overview of the expected information requested:

  • Application Fee (if applicable);
  • Revised Business Plan;
  • Financial Projections for the next 3 years, clearly identifying the impact of the additional business:
  • Profit and Loss account
  • Balance Sheet
  • Stress Test on Financial Projections
  • Regulated Individual Form (for any new individual carrying out a Regulated Individual function);
  • Controller Form (for any new Controllers within the structure); and
  • Any other document the applicant considers the GFSC should take into consideration as part of the application.

 The Regulated Firm should consider the following:

  • What new services/permissions it requires;
  • The type of new business/activity;
  • Where the business will be sourced;
  • Resources to deal with the additional business;
  • The impact of the additional business on its capital requirements; and
  • What changes are being effected to its systems and controls.

 

New Cell

In order for the GFSC to be able to consider the approval of a new cell, the following information and documents are required for submission:

  • Application Fee 
  • List the names, addresses and nationalities of all cell users, together with the number of class of shares held, or to be held, directly or on their behalf.  
  • Controller Form should be used for all individuals or corporate bodies with 10% or more beneficial interest.  In the case of ownership by corporate bodies, please provide an organisation chart showing all associated and affiliated companies, including details of person(s) owning less than 10%.
  • Please provide the latest audited financial statements of the immediate parent of the proposed cell user, and, if applicable, the consolidated accounts of the group.
  • What is the proposed capital for the cell and how is it to be subscribed?
  • Provide details of signatories to the cell’s bank mandate.     
  • State the nature of the cell user’s business.  
  • State the nature of the risks to be covered and the classes of business to be transacted. Please provide details of the losses expected, historic loss patterns and ratios for the type of business and the due diligence performed on this data to verify its reliability. Please provide evidence to support this analysis.
  • Please state the sources of business.
  • Please state the guiding principles as to reinsurance including the cell’s maximum retention per risk or event after all reinsurance ceded and the names of the principal reinsurers.  
  • Financial Projections, including, for the first three years after approval of the cell
    • estimates relating to expenses of management (other than costs of installation) and in particular to current general expenses and commissions;
    • estimates relating to premiums or contributions both gross and net of reinsurance and broken down between Gibraltar, EEA States and elsewhere and to claims (after all reinsurance recoveries);
    • a forecast balance sheet;
    • a forecast cash flow statement; and
    • estimates relating to the financial resources intended to cover underwriting liabilities and the margin of solvency.
  • Please demonstrate the effect that the inclusion of the cell will have on the overall solvency of the PCC.   
  • Have any of the parties connected with this application, previously applied either individually or in conjunction with others, for authority to transact insurance business in any other jurisdiction?  If so, please provide details.     
  • Will the insurance manager provide underwriting services to the company?
  • Will the insurance manager handle the claims?  If not, who will?      
  • Please state fully how any risk gap can be overcome.
  • State any connection between the cell (including directors and officers of the cell user) and any person or organisation directly or indirectly (e.g. insurance brokers, etc.) by the cell.
  • State whether the cell user proposes to make any loans to related parties.
  • Signed Declaration – stating that the proposer is aware that it is an offence to furnish false or misleading information.
  • Any other document the applicant considers the GFSC should take into consideration as part of the application.

Please request cloud access via E-mail at authorisations@gfsc.gi in order to submit the Application Pack. Please include the following information in the subject field: ‘Name of Regulated Firm– Cell Application’. Paper copies are not required unless indicated by the Authorisation team.

Please note that we accept signed signature copies sent via e-mail and electronic signatures, which must originate from the Regulated Firm /Applicant’s domain.  

 

Capital requirements

The MCR is the minimum amount of capital the insurance company needs to cover its risks. The absolute floor of the MCR is as below: 

 

Direct Insurer Absolute MCR
Life insurer €3.7 million
Non-life liability insurer €3.7 million
Non-life other insurer (including captives) €2.5 million

  

Reinsurer (both life and non-life) Absolute MCR
Captive reinsurer €1.2 million
Reinsurer (excluding captives) €3.6 million

Further information on the calculation of the MCR is in Article 129 of the Solvency II Directive. The SCR is a risk responsive capital measure calibrated to ensure each insurer will be able to meet its obligations over the next 12 months with a probability of 99.5%. Further information on the calculation of the SCR is in Chapter VI, Section 4 of the Solvency II Directive.

Read more about our approach to Solvency II

 

Additional Information 

The business plan should comprehensively set out:

  • What services the firm intends to carry out and how it proposes to conduct the activity;
  • Structure charts outlining both in-house and outsourced operations;
  • Board structure and terms of reference, including details of any sub-committees set up by the Board to assist it to carry out its duties;
  • The firm’s risk management function;
  • An assessment of the main risks facing the firm and how these are to be mitigated;
  • The resources that are to be made available and the systems that the applicant intends to employ;
  • Target market;
  • How clients will be sourced;
  • How records will be maintained;
  • How, and by whom, any significant decisions will be made;
  • Details of outsourcing arrangements and how the firm will monitor and oversee these, including the controls implemented by the firm on these arrangements;
  • Reinsurance information; and
  • If the applicant forms part of a larger group, details should also be provided of the activities of the group and a description of its structure.

The GFSC will be seeking evidence that the firm has considered, documented and implemented the risk, compliance and operational issues associated with the proposed activities. 

We will not consider an application complete if there are any outstanding documents.