By Gibraltar Insurers 2019 report editor Matt Scott

Brexit. Love it or hate it, you just can’t get away from it at the moment. Every day there seems to be a new development, more often than not a setback, in the headlines, and all that remains is uncertainty as to how the UK will withdraw from the EU, if at all.

And for insurers, the uncertainty that continues to rumble on is, at times, almost unbearable, so much so that the ABI issued a statement after Theresa May’s crushing defeat in parliament in January describing the situation as delivering “unprecedented uncertainty” and director general Huw Evans calling for politicians to unite to find a way to avoid a no-deal Brexit.

Should the ABI and Evans not get their wish, from 29 March UK insurers will no longer be able to write business in the EU, and the same holds true for insurers based in Gibraltar.

Gibraltar and UK-based insurers will, however, continue to be able to write business in Switzerland following the signing of a deal that replicates the arrangements that Swiss insurers have with the EU.

Gibraltarian insurers will also be relieved that their imminent departure from the EU will not affect their relationship with the UK market, with both the UK and Gibraltarian regulators committed to retaining access to both markets after their departure from the EU.

But the threat of a no-deal Brexit has nonetheless already led some Gibraltarian insurers to pull out of their European ventures. Others are considering leaving Gibraltar altogether, with Malta or Luxembourg their most likely destination.

Whatever happens, it seems that insurers in Gibraltar will continue to operate under Solvency II regulations and the capital requirements that come with it. For now, at least.

And it is here that Gibraltarian insurers are finding some good news. Of the 23 Gibraltar-based insurers analysed in this report, all but one had enough funds to cover their Solvency Coverage Ratio at the time of publishing their Solvency and Financial Condition Report, down from four last time around.

And that one insurer who fell short has already acted out a remediation plan that has put it back on a sound capital footing.

When it comes to profitability, Gibraltar has also fared well, with an eight-percentage-point reduction in the loss ratio helping the market post a profitable aggregate combined operating ratio of 88%.

Expenses, however, have been rising on the Rock, and with Gibraltar historically renowned for its low expense ratios, insurers will be keeping a watchful eye on this as we progress through Brexit Day and into a very uncertain future.

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