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GFSC sets out Solvency and Financial Condition Report expectations at Marcuson Consulting webinar

30 Mar 20

As the COVID-19 outbreak disrupts our daily lives and usual ways of working, the GFSC was grateful to Marcuson Consulting for the opportunity to set out its expectations of firms concerning Solvency and Financial Condition Reports (SFCRs) at their webinar held on 26 March. 

SFCRs are a key tool for third parties to assess the financial condition of insurer. Firms are required to produce SFCRs on an annual basis. Joe said that firms should not “just produce an SFCR to tick a regulatory or compliance box.” They can be used as a “marketing tool…to set out what you do and how well you do it, how you manage your risks, the level of capital you hold and why this is appropriate given the specifics of your business: your risk appetite and your risk tolerances.” 

SFCRs, like Own Risk and Solvency Assessments (ORSAs), if used well and incorporated into firms operations and processes, are valuable tools that can add real value. Joe noted that firms that “have fully adopted the ORSA into their operations and processes tend to see the most value from its production”. SFCRs are a public document, they should also be readily available and easy to locate. 

Joe also highlighted a number of other relevant issues facing Gibraltar’s insurance sector:

  •  HM Treasury has published a consultation on “Market access arrangements for financial services between the UK and Gibraltar”. The GFSC urge Gibraltar based firms to respond to the consultation, which closes on 11 May 2020.  
  • The GFSC has noted a number of UK motor market challenges, including the impact of the Ogden rate change on reinsurance costs; claims inflation of circa 5-7%; and the effects of a soft market making it difficult to increase premiums as operating costs increase. 
  • The adoption of machine learning and artificial intelligence will benefit those who can afford to adopt it, but others may fall behind and unknowingly pick up higher risk business.
  • The full impact of COVID-19 is still largely unknown. The GFSC’s regulatory approach to the pandemic can be found here.

Joe concluded by emphasising “whilst our office may be closed to external visitors, we are facilitating meetings via video or conference calls instead of face to face and these appear to be working well.” He also stressed that “at this time [firms] should continue to communicate with [their] usual supervisory contacts in the normal way and if [they] are experiencing any difficulties, please do let us know.”

Notes to Editors:

1. Joe Perdoni speech at 1st Annual Gibraltar SFCR review: Raising the bar, 26 March 2020.

2. The GFSC is a regulator of the Gibraltar financial services market, regulating providers of financial services conducted in both Gibraltar and other jurisdictions. The GFSC's vision is to be an efficient, forward looking, and credible regulator, that is fair and proportionate, and works collaboratively with stakeholders.

3. The GFSC's regulatory objectives are the promotion of market confidence; the reduction of systemic risk; the promotion of public awareness; the protection of the good reputation of Gibraltar; the protection of consumers and the reduction of financial crime. 

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