Insurance
The insurance sector on the Island developed chiefly following a decision in the early 1980s to encourage diversification within the Islands economy. Companies carrying out insurance business in or from the Isle of Man are required to be authorised under the Insurance Act 2008. Regulations made under this Act provide for detailed supervisory reporting requirements.
The Act seeks to ensure that senior management and controlling parties of insurance businesses are fit and proper and that the companies are financially sound. The legislation is clear and comprehensive and its reporting requirements satisfy the IPA's strict supervisory needs without placing unnecessary demands on the market place.
The IPA is committed to the continued development of an appropriate and up-to-date regulatory framework and was one of the first domiciles to introduce legislation allowing captive insurance companies from other territories to re-domicile to the Island without being liquidated in the original territory. This has considerable savings for the company concerned both in time and cost. The Authority has also introduced legislation in March 2004 to allow the formation of protected cell companies (PCCs). Such entities will offer a means of alternative risk transfer to companies for which traditional insurance was previously the only commercially viable option.
The Life Assurance Sector
The Isle of Man has probably the largest offshore life assurance sector. The Island's combination of highly skilled staff, strong but appropriate regulation and flexible fiscal options has seen it develop into one of the worlds leading centres for offshore life assurance. It is home to the international subsidiaries of highly respected life assurance companies, which attract business from all around the world.
The Isle of Man, with its wealth of experience in the international financial services sector, has exceptional qualifications in the field of life assurance. Furthermore, the Island has a highly trained workforce with experience of the international life insurance market, its products and administration requirements. Its people are responsive to the needs of this demanding market and provide the high levels of service required. Specialists in their respective fields are also on hand to assist new and existing businesses.
The Income Tax (Exempt Insurance Companies) Act 1981 was repealed with effect from April 2007 under the Income Tax (Corporate Taxpayers) Act 2006. Insurance companies are now subject to income tax at a rate of 0%.
The life assurance companies based on the Island are leaders in the development and distribution of some of the most innovative life assurance products to be found. They are ready to meet the changing demands of an international market. It is this expertise that attracts highly respected corporations to set up their insurance subsidiaries in the Isle of Man.
One of the key drivers behind the growth in life business on the Island is the security afforded to policyholders by the Policyholders Protection Scheme. In the event of a default, the scheme offers compensation to policyholders of up to 90% of amounts due to them, funded by a levy on all life insurance companies operating on the Island. Unlike many other policyholder protection schemes, the Island's system operates globally, covering investors no matter where they reside. For further information see the Life Insurance (Compensation of Policyholders) Regulations 1991.
The Captive Sector
For captive insurance companies, the Island has the necessary local expertise to ensure that the formation and running of a captive insurance company can be achieved with maximum ease. The market leaders in captive management are represented on the Island. The Island is also home to many suitably qualified personnel with a wealth of captive expertise and international experience to act as locally based directors.
The Island has been a recognised captive domicile for over quarter of a century. The sector has remained buoyant over recent years in spite of the relatively soft commercial market. It is now in a strong position to offer alternative means of risk management against a backdrop of falling capacity and rising premiums across many lines.
Captives have become an integral part of the risk management strategy of large companies and continue to offer one of the most effective and widely used methods of risk financing. The Isle of Man is one of the most successful captive locations, attracting business from many parts of the world. Recent years have seen the development of diverse alternative risk transfer vehicles
The Island's Government is committed to the development of the captive insurance sector and in March 2004, legislation was introduced to allow the setting up of Protected Cell Captives within the jurisdiction. PCCs can provide a means of entry into the captive insurance market to entities for which it was previously uneconomic. The overheads of a protected cell captive can be shared between the owners of each of the cells, making the captive cheaper to run from the point of view of the insured.
Regulations and Guidance
For further information on regulations and guidance in relation to insurance business, please see the IPA website.
Policyholder protection
For life assurance companies, the Isle of Man's Life Assurance (Compensation of Policyholders) Regulations 1991 ensure that in the event of a life assurance company being unable to meet its liabilities to its policyholders, up to 90% of the liability to the protected policyholder will be met.
Unlike many other policyholder protection schemes, the Island's scheme operates globally, providing protection to policyholders no matter where they reside.
The scheme would be funded by a levy on the funds of the other life assurance companies.
The Financial Services Ombudsman
The role of the Insurance and Pensions Authority does not extend to acting as arbitrator for individual policyholder complaints. However, it should be noted that the Isle of Man has also recently introduced a Financial Services Ombudsman scheme which has a broader remit. This service is free and designed to handle consumer disputes in the areas of Insurance, Banking, Investment and Pensions from consumers of Isle of Man regulated businesses from around the World.
To pursue a complaint a complainant must first have formally taken the matter up with the institution concerned, and must contact the Ombudsman within 6 years of the act or omission taking place, or within 2 years of the date at which the act or omission came to the notice of the complainant.
Complaints where the act or omission occurred prior to April 20th 1999 do not fall under the scheme.
The scheme's adjudicator has the power to impose directions to remedy the position, and can make monetary awards of up to £100,000.
Acknowledgement: Insurance and Pensions Authority
Contact Details:
Isle of Man Government Insurance and Pensions Authority
4th Floor, HSBC House
Ridgeway Street
Douglas
Isle of Man
IM1 1ER
British Isles
TEL NO: +44 (0) 1624 646000
FAX NO: +44 (0) 1624 646001
EMAIL: ipa.admin@ipa.gov.im
Please click on the Insurance and Pensions Authority logo for a link to their own website.