HM Government of Gibraltar has published the Financial Services (Insurance) (Miscellaneous Amendments) Regulations 2020, which came into force on the 26th November 2020. The Regulations carry out a number of changes to Gibraltar’s existing insurance framework aimed primarily at permitting Gibraltar based insurance intermediaries and MGAs to formally appoint insurance managers.
Managing General Agents (MGAs), which themselves are a category of insurance intermediary under Gibraltar law, will therefore have the ability to benefit from the expertise and range of services offered by local insurance managers. This will allow MGAs to plug into the infrastructure of Gibraltar’s long-established insurance managers that provide managerial functions, as well as back office, accounting and other services. MGAs will also be able to contract the services of insurance managers in connection with applications to the GFSC for permission to be established in Gibraltar.
Some of the key changes introduced by the Regulations are summarised as follows:
(1) The Regulated Activities Schedule to the Financial Services Act 2019 is amended to permit insurance managers to exercise managerial functions in respect of intermediaries (and not only direct insurance or reinsurance firms).
(2) The Financial Services (Insurance Distribution) Regulations 2020 are amended to allow intermediaries/MGAs to outsource functions and services to third party providers or related companies in areas such as claims handling or marketing, although not the outsourcing of underwriting activity. Any outsourcing of critical or important operational functions or activities will require the GFSC’s prior approval.
(3) The Financial Services (Insurance Distribution) Regulations 2020 also now contain new risk transfer provisions, which will enable intermediaries and MGAs to enter into agency/risk transfer agreements whereby they will hold customer money as agents for insurers. Insurance intermediaries and MGAs will however have an option to either comply with these risk transfer requirements or adhere to the “original” customer money requirements under the Regulations.
The GFSC will also be publishing new guidance in the form of a “Managing General Agent (MGA) – Expectations Paper”. This guidance will outline the GFSC’s supervisory approach for MGAs and provide clarity to both existing firms, as well as those seeking to become established in Gibraltar.
ISOLAS LLP Partner, Christian Caetano, commented:
“Gibraltar has seen increased interest from the UK MGA sector over recent years due to its reputation as an innovative insurance jurisdiction, as well as the GFSC’s standing as a robust, yet flexible regulator. We have also seen global recognition for Gibraltar’s landmark Distributed Ledger Technology regime, which has continued to attract fintech business from around the world to the Rock.
Gibraltar is therefore now uniquely positioned for MGAs and insurtechs due to its nucleus of both insurance and technology expertise. Furthermore, the Gibraltar Authorisation Regime (GAR), which will shortly come into effect, will enable continued access into the UK insurance and wider financial services markets for Gibraltar insurance firms. This means that now, more than ever, Gibraltar should be considered as the perfect gateway to provide insurance products into the UK.”
For any enquiries in relation to the above, please contact Partner, Christian Caetano, firstname.lastname@example.org