As Europe’s largest domicile for captive insurance, Guernsey, a British Crown Dependency, leads to insurance business flowing through London’s wholesale insurance markets that would otherwise go somewhere else, causing a positive impact in the UK economy, according to a recent report.
Conducted by Frontier Economics, it highlighted the contributions the island’s finance sector makes to the UK economy, revealing that Guernsey-based funds channel £57 billion into the country’s economy.
The report stated that a significant proportion of this investment into the UK would not have occurred if these funds were domiciled elsewhere.
Guernsey’s insurance, pension and private wealth sectors also have a positive impact, according to the research.
Analysts stated: “The island is Europe’s largest domicile for captive insurance which leads to insurance business flowing through London’s wholesale insurance markets which, without the island’s expertise and regulatory framework, would go elsewhere in Europe or further afield to Bermuda, Cayman Islands and the USA.”
According to the report, UK FTSE 100 companies may collectively save almost £100 million per year by using Guernsey captive insurance structures.
Moreover, Guernsey international pensions generate approximately £30 million per year in total for UK professional services firms and investment managers.
The findings also highlight that UK fund managers are generating more than £2 billion of fees from Guernsey-based funds annually, generating additional tax revenue for the UK, as well as a social value of approximately £3-4 billion every year for the country.
The report also shows how Guernsey’s financial services expertise is aligned with several UK policy priorities such as the transition to net zero, infrastructure funding and regional investment.
Rupert Pleasant, Chief Executive Officer, Guernsey Finance, said: “This report has been key in highlighting the value of Guernsey to the City of London and the UK more broadly.
“The island’s financial services industry has played a significant role in increasing the international competitiveness of UK financial services providers, improving risk-adjusted returns and diversifying portfolios. It represents a mutually beneficial collaboration.
“We are proud to be a part of the British family. The symbiotic relationship that Guernsey enjoys with the UK benefits both jurisdictions. We hope this partnership will continue to grow, to preserve our existing value and identify future opportunities for collaboration.”
