The Gibraltar insurance sector has gone through some challenging times recently, but a vote of confidence from new Slovakian insurer Premium Insurance in their decision to set up in this jurisdiction after intensive research is reassuring.
A long connection with Gibraltar and extensive experience in both the financial services and insurance industries led to Andy Baker being headhunted to become local MD of Premium.
Born in the north-east of England, Andy’s career in insurance has taken him around the globe, his association with Gibraltar going as far back as 1987. “I was working out of London for an insurance company with an agency in Gibraltar, so I used to come in every month back then,” he says. Returning in 2007 as Chief Executive of Argus (Europe), during which time the company acquired their agency in Malta leading to a three and a half year stint over there, Andy’s contract finished in 2013. “I wasn’t sure whether I had retired or I was unemployed but after two months of an English winter I decided I was unemployed, so I came back to Gibraltar and worked for the Insurance Regulator for 18 months before becoming the MD of specialist travel intermediary Staysure,” he states.
Premium Insurance is the first company that was licensed since the Brexit vote and with insurance companies confronting a marketplace that is changing more drastically than perhaps ever before, what was it that persuaded the Slovakian board to opt for Gibraltar? Andy explains that the investors are the largest independent insurance broker in Slovakia. “It is not an unusual move to go from risk placers to risk takers, so they decided they wanted to set up an insurance company in Slovakia.
The Slovakian regulator was refreshingly open and honest and admitted that they had little experience in setting up a new insurance company.” Andy goes on to state that it was recommended that they find another jurisdiction from where they could be passported into Slovakia. “All the big European insurers have a branch in Slovakia, so the regulator was accustomed to this model, but no-one had a local insurance company,” he says, “so the launch of Premium proved to be newsworthy in the Slovakian market.”
Andy outlines the three key aspects that meant the Slovakian Regulator was comfortable with Gibraltar as jurisdiction of choice for Premium. “Firstly Gibraltar had an experienced regulator and offered full EU access and, secondly, it was open for business and open to discussion,” he says. “It wasn’t an easy process, but it was thorough and very professional.” The third point was that in Gibraltar they had experience in the insurance management system and approach, which is very supportive and cost-effective for a start-up insurance business. In this respect, Premium is a client of Artex / Quest Insurance Management and Premium is based in their offices at Ocean Village Marina. “Quest is probably the biggest insurance management company in Gibraltar and can provide all of the services that we need from one location,” Andy explains.
The investors came over many times during the fifteen month long licensing process, so by the end of the process they were very comfortable. “This is the first Slovakian insurance company founded in a very long time, if ever,” Andy says “and the fact that a Slovakian investment vehicle could be based in Gibraltar has attracted international interest.”
Premium also distinguishes itself from other Gibraltar insurance captives in that it is not focused on the UK. “We only write in Slovakia and the Czech Republic through our branch office in Bratislava ”, Andy states. “What is also different to the usual Gibraltar model is that we only write commercial business, with no motor insurance policies.”
What Premium is doing is taking small lines on a broad range of industrial and, commercial business, but their specialism is the more complex risk. “One of the problems with commercial insurance is that you want to be confident that you are going to be paid if you have a claim, and because we are a new insurance company it begs the question why should we trust Premium? Andy comments. “We have significant competitive advantage in that the investors have worked with these customers for years, and their advice is trusted. Premium becomes an extension of the service that they can offer to their clients.
Speaking just a day after the Government reiterated its complete support for the insurance sector in Gibraltar and their confidence in the important role played by the GFSC in delivering high European standards of insurance regulation, Andy’s thoughts are that all parties concerned are now working together.
“Like many regulators they must still be feeling their way with Solvency II because it is one thing to work up towards the actual implementation of Solvency II regulations, and there were substantial changes required, but quite another to then work out how to regulate within that,” he says “and I think that as an industry we are starting to work with them to appreciate just what is needed, but it is a process of give and take.”
The big question is obviously how Gibraltar’s insurance industry will be affected by Brexit and Premium’s stance is to be prepared and not to stick their head in the sand. “We don’t write in the UK, only in mainland Europe jurisdictions, so there is no lifeline if passporting goes,” Andy confirms. “It is obviously a risk, and it is number one on our risk register as you might imagine, however, the board’s view is that it probably won’t happen for three years and in two to three years the company will be in a good place.” Andy clarifies this by stating that with a proven track record of profit which will have gone back in to the company to grow their capital base, it could re-domicile easily. “We have already talked to the Slovakian regulators and they would be happy to do that, however if we want to continue to use the insurance management model then Quest / Artex already operate in Malta and are actively looking at Luxembourg and other jurisdictions.”
“If passporting stays, then we will stay,” Andy says, “so the preference is obviously that we don’t have to move, but that we keep all options under review for now.”
Andy’s personal view is that Gibraltar is very sensibly repositioning itself as a market that will facilitate international companies wishing to access the UK. “Because of its bi-lateral agreements, which will come with the UK, Gibraltar will be ideally suited, so in that sense I don’t think that the risk is as dire as people think. The border is, of course, another issue altogether!”
“The future is unknown but there is a lot of work going on at the moment, both at Government level and regulator level and also in the market, and I think that is absolutely right.”