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, the GFSC will set out expectations of new insurance companies and high-level areas of focus when considering applications for new insurance companies and material changes to business plans.  

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 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

Following successful completion of the pre-application process, applicants should submit an application in line with the Staged Application for Authorisation Approach.

Initially, the applicant will only submit the Stage 1 application information - it is important that only Stage 1 information is provided at the outset of the application process.

The GFSC will communicate to the applicant that the application can progress to the next stage once the GFSC is satisfied with the content provided at the current stage. The applicant will then be invited to submit the further information required at the next stage of the application process.

Please request cloud access from the GFSC to submit the information requested, via e-mail to [email protected], stating in the subject field: ‘Name of Applicant – Application’.  Paper copies are not required unless indicated by the 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.  

Stage 1 - Business Model, Capital & Key Individuals

The following is to be submitted for Stage 1: 

  • Application Fee (in full);
  • Application Form;
  • Stage 1 of the Insurance Comprehensive Business Plan (not including Stages 2 and 3).  To note that the applicant’s business plan should be bespoke and tailored to the business of the applicant;
  • Controller Form (for each Controller);
  • Related Party transactions;
  • Own Risk & Solvency Assessment (ORSA);
  • Scheme of Operations;
  • Solvency Capital requirement forecast (EIOPA);
  • Minimum Capital Requirement (MCR);
  • Stress test on Financial Projections; 
  • Establishment of Remuneration Committee; 
  • Where products/services are shared across the Group, evidence that an independent transfer pricing exercise has been carried out.

On receipt of the application fee and Stage 1 documents, the GFSC will confirm the GFSC Supervisor who has been assigned to assess the application for authorisation.

Any missing or additional sector-specific documents and/or information required by the GFSC to complete Stage 1 will be communicated to the applicant during Stage 1.

When the GFSC is satisfied with all the responses and information/documentation received, the GFSC will inform the applicant that its application can progress to Stage 2.  

Stage 2 - Risk Management, IT Systems, Corporate Governance & Financial Crime

The following is to be submitted for Stage 2: 

  • Stage 2 of the Insurance Comprehensive Business Plan (not including Stage 3);
  • Documentation and information including, but not limited to:
    • Corporate Governance and control
    • Business Continuity Management Plan
    • IT infrastructure, Cyber and systems including outsourcing arrangements
    • Operational & Outsourcing Risk including material outsourcing arrangements
    • Systems controls & Risk Management
    • Financial Crime controls, compliance with Anti-Money Laundering/Combating the Financing of Terrorism requirements (as applicable)
    • Risk Methodology and framework policy documents
    • Risk Register & controls
    • Disaster Recovery Plan 
    • Updated business plan, if required.

Any missing or additional sector-specific documents and/or information required by the GFSC to complete Stage 2 will be communicated to the applicant during Stage 2.

When the GFSC is satisfied with all the responses and information/documentation received from an applicant, the GFSC will inform the applicant that its application can progress to Stage 3.

Stage 3 - Conduct of Business, Non-Financial Resource, Policies & Procedures

The following is to be submitted for Stage 3: 

  • Stage 3 of the Insurance Comprehensive Business Plan;
  • Documentation and information including, but not limited to:
    • Non-financial resources
    • Compliance structure
    • Conduct of Business (Full Conduct Risk Framework documents)
    • Detail of KPIs
    • Customer Journey from sales to claims with information provided to customers at each time of the cycle (with outcomes to be visible and reviewed at board level)
    • Complaints Appetite indicators
    • Claims Appetite indicators and Follow-up report
    • Claims Performance Reports (Evolution of Claims, Claims Frequency, Complaints on Claims, Acceptations Ratios, Declined, Declination causes, claims feed into Product review)
    • Distributors Fee Structure
    • New Product Assessment Reports
    • Customer Outcomes to be visible and reviewed at board level
    • Board Dashboards on products performance (prices, claims and complaints)
    • Consumer Duty compliance (as applicable)
    • Operational Resilience compliance (as applicable) 
    • Remuneration Policy
    • Conflict of Interest Policy 
    • ESG Policy 
    • Diversity Policy
    • Conflict of Interest Register
    • Liquidity/solvency policies 
    • Internal Audit Plan 
    • Complaints Handling Policy 
    • Terms of Reference of the Board, Board sub-Committees, Risk Committee and/or Audit Committee, Underwriting/Pricing committees, as applicable 
    • Audit, accounting, and banking arrangements 
    • Professional Indemnity Insurance 
    • Claims & Complaints Handling Policies & Procedures 
    • Risk event log (presented to board quarterly)
    • Terms of Reference of the Conduct Committee, if applicable
    • Pricing Policies and Procedures
    • Vulnerable Customers Policy
    • Claims Handling agreement which should be recorded (claims upheld, accepted, declined, fraud prevention)
    • Claims Auditing oversight 
    • Contracts with parties to whom material operational functions are outsourced
    • Outsourcing contracts with Claims Handlers and Monitoring Plan
    • Agreements with main distributors/TOBAs 
    • Delegations of Authority
    • Completed and signed Regulated Individual Forms and Non-Executive Director Forms.

When the GFSC is satisfied with the Stage 3 responses and information, the application will move to a GFSC decision for authorisation. 

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 [email protected] 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 €4 million
Non-life liability insurer €4 million
Non-life other insurer (including captives) €2.7 million

  

Reinsurer (both life and non-life) Absolute MCR
Captive reinsurer €1.3 million
Reinsurer (excluding captives) €3.9 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