Code of Practice for Branch Operations

Summary

This Code of Practice, issued by the Guernsey Financial Services Commission under Section 78 of the Insurance Business (Bailiwick of Guernsey) Law, 2002, sets out requirements for insurers operating as Branch Operations in the Bailiwick rather than as locally incorporated companies. It focuses in particular on branches writing long term (life) business for non Bailiwick residents, and separately addresses UK authorised insurers running branches serving only Bailiwick residents.

• Prudential equivalence: If the home jurisdiction's prudential rules are broadly equivalent to Guernsey's, the Branch Operation is exempt from the prudential supervision aspects of the Law, but the Commission still needs sufficient information on the branch's business, future development and managing individuals, and will liaise with the home regulator before a licence is issued.
• Local management and accounts: A branch writing long term business for non Bailiwick residents must establish a local place of management, maintain separate accounts for business written in the branch, and keep bank accounts in the Bailiwick.
• General representative: Such a branch must appoint a general representative.
• Business plan: A business plan must be submitted with the application, covering the nature and risks of business underwritten, policy conditions, reassurance arrangements, assets covering the solvency margin, start up expense estimates, ongoing management expense estimates, premium and claims estimates, and a forecast balance sheet (see also the Insurance Business Rules, 2021 for further application requirements).
• Policyholder protection: The branch must comply with Guernsey's policyholder protection requirements, as set out in the standard condition imposed under section 12 of the Law on licences for long term business.
• Asset localisation and actuary: The branch must localise sufficient assets as agreed with the Commission, and, where appropriate, appoint a suitably qualified Actuary.
• UK authorised insurers: UK authorised insurers running Branch Operations that transact only with Bailiwick residents must report on matters not exempted, as detailed in Section 38 of the Law.

The Commission retains discretion to apply prudential powers as it considers appropriate given the size, nature and complexity of each branch's business.

Key obligations

• A Branch Operation writing long term business for non Bailiwick residents must establish a local place of management, maintain separate accounts for that business, and keep bank accounts in the Bailiwick
• Such a branch must appoint a general representative
• Such a branch must submit a business plan with its application covering business nature and risks, policy conditions, reassurance arrangements, solvency margin assets, start up and continuing expense estimates, premium and claims estimates, and a forecast balance sheet
• Such a branch must comply with Guernsey's policyholder protection requirements under the standard section 12 condition
• Such a branch must localise sufficient assets as agreed with the Commission
• Such a branch must, where appropriate, appoint a suitably qualified Actuary
• UK authorised insurers with Branch Operations transacting only with Bailiwick residents must report on matters not exempted under Section 38 of the Law

Applies to

insurers operating Branch Operations in the Bailiwick of Guernsey, branches writing long term business for non Bailiwick residents, UK authorised insurers with Bailiwick branches

Related documents

• This document is made under Insurance Business (Bailiwick of Guernsey) Law, 2002