An expert panel of audit, legal and regulatory specialists gathered for Pro Global’s audit focussed webinar in Gibraltar.
Debating the insurance landscape in Gibraltar amid challenging economic conditions and looking ahead to the future
“Gibraltar is a leading digital hub and its insurance sector is well-regulated,” Nigel Feetham said. “We have a solid profile of underwriters operating here, and three companies alone are underwriting at least £1 billion each of gross written premiums. Combined with the right infrastructure, and a regulator that is open for business, it is no surprise that companies are looking to do business here.”
“Gibraltar continues to grow each year and is the place to come to if you want to write UK motor insurance,” Joe Perdoni agreed. “It is a highly competitive market, so underwriting and claims process are areas of focus for the GFSC in 2022 – along with insurance groups and premium debtors.”
The Authorisations process in Gibraltar is in two phases – pre-application phase and application stage.
“During the pre-application phase we look to understand and discuss the proposed applicant's business and operating model, funding, key risks and their governance arrangements. This includes how they will meet the substance expectations,” Monika Sookhee explained.
With a regulator that is both approachable and open for business, plus the necessary regulatory framework and infrastructure in place, Gibraltar is – as Kathryn Morgan pointed out – a great incubator for new insurance businesses.
To keep these new business ventures alive and operating, however, means identifying – and solving – risks early on. This is where audits come into play.
“There is a lot of value to be had with audits, especially as risks are changing all the time – just take inflation as an example,” Kathryn said. “But the key is to get the scope right. It is not just about ticking a box; the aim is to stop losses, increase profits and reduce risks for yourself and from any third party suppliers.”
The panellists agreed that the high inflation, high interest rate environment that Europe was heading into for H2 2022 and beyond was placing pressure on insurance businesses to properly scrutinise their reserving practices, as well as their claims trends and forward pricing models. Here again, audits are a significant tool to get a real-time grasp on how high inflation is impacting the value of reserves, for instance, and what needs to be done to correct this moving forwards.
Another factor that plays into identifying and mitigating risks is data. As Pervin Sivanathan explained, data can be used to effectively scope your audits, and therefore help to identify trends and therefore risks.
“From a coverholder perspective, it is about ensuring coverholders are attracting the right customers, understanding the payment process, and ensuring there is effective control over the remittance of funds. From a claims perspective, it is about ensuring claimants are being responded to in a timely fashion and that reserves are being recorded properly.”
Pervin Sivanathan, Group Head of Audit & Advisory
One key element that ties all these points together is technology. Gibraltar has always been a leader of online sales, even before the pandemic, so the future of the sector, as Pervin pointed out, will continue moving in this direction, with a focus on AI and machine learning.
As the panel agreed, such technology allows Gibraltar to be flexible, and with investments in the younger generation to join the industry, a secure market, plus access to the UK, there is scope for diversification in Gibraltar outside the motor insurance space.
With the right infrastructure behind it, it seems that the insurance market in Gibraltar will continue to go from strength to strength. Who knows where this small, yet mighty, jurisdiction will be in a few years to come.
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