The Government of Gibraltar yesterday published legislation that permit EEA (non-UK) insurers, on the basis of a unilateral policy decision and regardless of loss of EU passporting rights on the 31 December 2020, to continue to write business in Gibraltar into the future (beyond the 1st January 2020) without needing full authorisation from the Gibraltar Financial Services Commission (GFSC) where this would enhance competition and increase choice for consumers as long as it is through a licensed insurance intermediary in Gibraltar.
Why this policy decision?
Whilst Gibraltar has a very substantial insurance industry (primarily focused on the U.K. motor market), there are not many Gibraltar insurers that underwrite local risks. This means that underwriting capacity for some classes of local risks is provided mainly by (foreign) EEA insurers. Of course, EEA firms will post-Brexit, in the absence of an agreement between the U.K. and the EU (which looks increasingly likely), become third country firms as a result of loss of EU passporting rights.
In line with the U.K, Gibraltar had already announced the implementation of a Temporary Permissions Regime and a Financial Services Contracts Regime to address this. However, these regimes contemplated either that EEA firms operating in Gibraltar would continue to write new business post-Brexit on a temporary basis with a view to obtaining a full licence in Gibraltar through a local branch (TPR), or running off the existing contractual liabilities but not writing any new business (FSCR). This could have led to EEA firms withdrawing underwriting capacity in Gibraltar, resulting in decreased competition (or even capacity no longer being available for certain risks) and also potentially an increase in insurance prices for local consumers. The new Regulations are intended to address this potential but real problem.
It should be noted that this does not affect the continuation of the common market between Gibraltar and the U.K. after the 31 December 2020 and the reciprocal UK/Gibraltar market access arrangements after that date. In this regard see the The Financial Services (Gibraltar) (Amendment) (EU Exit) Regulations 2020, UK Statutory Instrument No. 1274 of 2020 which will come into force on 14 December 2020.
Commentary
This is an excellent example of the Government, GFSC and industry working together constructively to deliver a post-Brexit outcome which is good for Gibraltar, good for the insurance market and good for local consumers. I am not sure there are many jurisdictions that can demonstrate this ability to act as quickly as Gibraltar in providing market certainty and doing so in such an efficient and business friendly manner.
The views expressed in this article by the author are solely those of the author.
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