Guernsey is seeing "massive" interest in captives given the hard market conditions as well as the confidence gained in the jurisdiction's whitelisting for economic substance from the EU.
"The level of interest is just massive," said Peter Child, head of European operations at Artex and managing director of the Guernsey operation, who was representing the Guernsey International Insurance Association on a panel at the Captives Knowledge Hub at the online Airmic conference, as Captive International reported.
"The volume is a challenge for us to deal with, but conversions aren't at the same level as yet," he said. "I think it's because captives should not be seen as a ‘magic bullet' in risk management."
After registering 11 new structures last year — the best result since 2016 — Guernsey did also see 24 closures during the year, ending 2019 with a total of 305 captives.
Guernsey expects a further increase in 2020, despite delays caused by Covid-19 lockdown.
The jurisdiction has more than a third of all captive insurance business in Europe, with more than 300 structures active on the island.
Child said: "There are still a large number of captives being formed, with larger captives going through the feasibility process or the set-up process as we speak."
A survey of Airmic members confirmed that two-thirds of risk managers and insurance buyers are now considering captives in response to the hardening market. More than a third of those already with a captive were now using their captive for increased retentions, and more than 30% were writing new lines of business.
James Morris, head of UK insurance and captive banking at Barclays believes Guernsey's whitelisted status by the EU and OECD for economic substance puts it in good stead to compete.
He said: "It has domicile experience, a good regulator, innovation, the experience of managers and infrastructure, and good legislation and flexibility - so I believe these elements keep it competitive. Additionally, Guernsey is supported well by a good banking infrastructure," the Captive Insurance Times reported.