insurance

Who is caught

Insurance in Jersey is regulated under two distinct regimes overseen by the Jersey Financial Services Commission (JFSC): the underwriting of insurance business under the Insurance Business (Jersey) Law 1996, and the intermediation of insurance under the Financial Services (Jersey) Law 1998. Which regime applies turns on whether an entity carries the risk or merely arranges, advises on or administers policies.

Insurance business (underwriting)

• Permit requirement: No person may carry on long-term or general insurance business in or from within Jersey without a permit granted under Article 7 of the Insurance Business (Jersey) Law 1996.
• Category A: Applies to applicants already authorised and supervised by a regulator outside Jersey.
• Category B: Applies to all other applicants, including captive insurers and special purpose vehicles such as transformer vehicles and insurance securitisation companies, per JFSC guidance.
• Motor liability add-on: Insurers writing motor vehicle liability insurance also need approval as an authorised insurer under the Motor Traffic (Third-Party Insurance) (Jersey) Law 1948, in addition to an Insurance Business Law permit.

General insurance mediation

• Registration requirement: Persons carrying on general insurance mediation business in or from Jersey must register with the JFSC under the Financial Services (Jersey) Law 1998; the Financial Service Business Order classifies this activity in Classes P, Q, R and S.
• Scope of Class P to S: The classes distinguish standalone mediation, mediation carried on alongside other authorised business, and incidental mediation with or without advice on policy terms.

Sources: Financial Services (Financial Service Business) (Jersey) Order 2009 · Insurance Business (Jersey) Law 1996 · General Insurance Mediation Business Code of Practice · Guidance Note: Applications under the Insurance Business (Jersey) Law 1996 · Guidance Note: Applications under the Motor Traffic (Third-Party Insurance) (Jersey) Law 1948

Key duties

Continuing obligations differ between insurers (permit holders) and general insurance mediation registrants, though both must hold authorisation, file periodic financial information, comply with the applicable Code of Practice, and deal openly with the JFSC.

Insurance permit holders

• Annual renewal: Permits are renewable on 1 October each year, per JFSC guidance and the proposed fees notices.
• Accounts and audit: Permit holders must keep proper accounting records, prepare annual financial statements, appoint a Commission-approved qualified auditor, and ensure the auditor's report is submitted to the Commission (Article 19).
• Solvency: Category B permit holders must maintain a margin of solvency: at least 17.5% of net premium income for general business, and the greater of GBP 50,000 or 2.5% of the required long-term business fund for long-term business, holding at least 75% (general) or 25% (long-term) of assets as approved assets at all times.
• Governance approvals: Category B permit holders must obtain Commission approval for directors, chief executives and shareholder controllers, must remain wholly owned by the original applicant unless the Commission agrees, and must obtain prior consent before changing directors or writing new products or risks.
• Actuary: Where long-term business is carried on, an appointed actuary must value long-term liabilities annually (or more often to monitor solvency) and endorse the valuation basis and solvency calculation in the annual financial statements.
• Periodic reporting: Category B permit holders must furnish six-monthly financial statements and information as determined by the Commission, audited accounts within three months of the financial period end, and a five-year rolling business plan with variance explanations.
• Annual Declaration: Under the Insurance Business Code of Practice, permit holders must submit an Annual Declaration confirming compliance with the Code and relevant AML/CFT/CPF requirements, noting material exceptions, and must be controlled by at least three appropriately qualified and experienced people.
• Display and notification: Permit holders must display their permit and any conditions, and notify the Commission of material changes in circumstances such as a change of ownership.
• Business transfers: Transfers of insurance business under Article 27 and Schedule 2 require prescribed documentation to be provided to the JFSC ahead of two Royal Court hearings, with a sanctioning Court Order deposited afterwards within the set period.

General insurance mediation registrants

• Accounting periods: Registered persons must obtain Commission approval of their first (maximum 18 months) and subsequent accounting periods and keep accounting records, securely stored and retained for at least 10 years.
• Financial statements: Registered persons must submit financial statements to the Commission within 4 months of the period end (extendable to up to 8 months), accompanied by a declaration, an auditor's report and relevant audit or consultant report details, using only a Commission-approved auditor.
• Solvency: Registered persons must maintain and calculate a margin of solvency, notify the Commission of any failure to maintain it, and comply with any Commission-approved scheme to restore it.
• Client money: Insurance money must generally be held at an approved bank in segregated insurance broking accounts, paid in within 3 business days of receipt, reconciled at least monthly (within 10 business days of the reconciliation date), and withdrawn only for permitted purposes, subject to bank undertaking and client disclosure requirements.
• Code of Practice: The General Insurance Mediation Business Code of Practice requires an effective governance system with a regulatory span of control of at least two appropriately qualified people, a Compliance Officer and MLRO, complaints handling, adequate financial resources and professional indemnity insurance, and written notification to the JFSC when governance thresholds are not maintained.

Cross-cutting duties

• Professional indemnity insurance: Under the JFSC Codes, registered persons must maintain adequate PII, with board oversight and specific notifications to the JFSC around exclusions, cancelled cover, retroactive dates and group arrangements.
• Supervisory data: Insurance business permit holders and general insurance mediation registrants must complete the JFSC's supervisory risk data collection; permit holders must at minimum complete the Section I footprint workbook even where excused from the insurance sector workbook.
• Advertising: Financial service advertisements (excluding money service business) must identify the issuer and provider, be clear, fair and not misleading, not claim Commission approval, and be retained with dissemination records for 10 years.

Sources: Financial Services (Advertising) (Jersey) Order 2008 · Financial Services (General Insurance Mediation Business (Accounts, Audits, Reports and Solvency)) (Jersey) Order 2005 · Financial Services (General Insurance Mediation Business (Client Assets)) (Jersey) Order 2005 · Insurance Business (Jersey) Law 1996 · Insurance Business (General Provisions) (Jersey) Order 1996 · Insurance Business (Solvency Margin) (Jersey) Order 1996 · General Insurance Mediation Business Code of Practice · Insurance Business Code of Practice · Guidance Note: Applications under the Insurance Business (Jersey) Law 1996 · Licensing Policy in respect of activities requiring a permit under the Insurance Business (Jersey) Law 1996 (2011-02-11) · Guidance Note: Transfers of Insurance Business under the Insurance Business (Jersey) Law 1996 (2014-01-10) · Professional Indemnity Insurance Guidance Note (June 2018) · Updates to our 2024 supervisory risk data collection (2024-09-27)

Exemptions and carve-outs

The instruments provide several carve-outs, both from the insurance business definition and from overlapping registration under the Financial Services (Jersey) Law 1998.

• Definitional exemptions: The Insurance Business (General Provisions) (Jersey) Order 1996 exempts certain general business classes (14 to 18) and certain single-member long-term business companies from Article 5, and exempts qualifying vehicle breakdown and roadside assistance benefit-in-kind contracts.
• Investment business carve-out: Insurance permit holders are exempt from Articles 13 to 18 of the Financial Services (Jersey) Law 1998 in respect of investment business connected to their permitted insurance business, so they do not need separate investment business authorisation for that activity.
• Long-term product providers: Per JFSC guidance, insurers that merely effect long-term insurance contracts under an Insurance Business Law permit can remain regulated solely under that Law; however, providing investment advice as defined under the Financial Services (Jersey) Law 1998 triggers registration as an adviser under that Law.
• Overseas mediation persons: The General Insurance Mediation Business (Exemptions) Order exempts overseas persons from registration in narrow cases: advice or assistance on contracts already in existence on 21 January 2005 (transitional, ceasing 12 months after that date or at next renewal if later), and business effecting or administering contracts with an authorised Jersey-incorporated insurer, resulting from an unsolicited approach, or under a qualifying agency arrangement.
• Appropriately regulated persons: Under the general insurance mediation accounts and client assets Orders, registered persons may apply for exemption, and appropriately regulated persons from specified overseas or UK regimes may qualify for exemption from those Orders.
• Advertising exemptions: The Financial Services (Advertising) Order excludes certain fund prospectuses, business-name-only notices, sponsorship statements and specified overseas-person communications, and does not apply to money service business advertisements.

Sources: Financial Services (Advertising) (Jersey) Order 2008 · Financial Services (General Insurance Mediation Business (Accounts, Audits, Reports and Solvency)) (Jersey) Order 2005 · Financial Services (General Insurance Mediation Business (Client Assets)) (Jersey) Order 2005 · Financial Services (General Insurance Mediation Business (Exemptions)) (Jersey) Order 2005 · Financial Services (Investment Business (Insurance Business – Exemption)) (Jersey) Order 2001 · Insurance Business (General Provisions) (Jersey) Order 1996 · Guidance Note: Treatment of Insurance Companies under the Financial Services (Jersey) Law 1998 in respect of Investment Business (2010-09-13)

Enforcement and penalties

Enforcement combines criminal offences, civil financial penalties, and a range of supervisory interventions including directions, court-appointed managers and public statements. Fee notices also carry late payment and late filing charges.

Criminal offences

• Unauthorised insurance business: Carrying on insurance business without the required permit is an offence under the Insurance Business (Jersey) Law 1996, punishable by up to 5 years' imprisonment or a fine, or both.
• Misleading information: Making false or misleading statements to induce insurance contracts, or providing false information to the Commission, is an offence.
• Breach of directions: As illustrated in a JFSC public statement, it is an offence under Article 36(7) for a person subject to statutory directions to act in breach of them, and for any permit holder to knowingly allow such a person to act in contravention.

Civil financial penalties

• Statutory basis: The Financial Services Commission (Jersey) Law 1998 (Articles 21A to 21G) creates a civil financial penalty regime applying to registered persons, principal persons, key persons and persons performing a senior management function.
• Band 1: Repeated failure (more than once in two years, after a written warning) to notify a matter required by a Code: up to the lower of 4% of average annual turnover or 100,000 pounds for a registered person, or 10,000 pounds for an individual.
• Band 2: A contravention not rectified within a reasonable Commission-set time: up to the lower of 6% of turnover or 4,000,000 pounds for a registered person, or 200,000 pounds for an individual.
• Band 2A: A negligent contravention causing or risking specified harms: up to the lower of 7% of turnover or 4,000,000 pounds for a registered person, or 300,000 pounds for an individual.
• Band 3: An intentional or reckless contravention involving those harms: up to 8% of turnover for a registered person, or 400,000 pounds for an individual.

Supervisory intervention

• Directions and public statements: The Commission may require information, conduct investigations, enter and search premises, issue directions, exercise powers of intervention, seek injunctions or remedial orders, and issue public statements about permit holders.
• Court-appointed manager: The Insurance Business (Appointment of Manager) Order and the equivalent Financial Services Order set out prescribed circumstances (inadequate management, disorderly cessation, failure to handle claims, unauthorised business, asset protection, avoiding forced closure, compensation schemes, or non-compliance with directions) in which the Commission may apply to the Royal Court for appointment of a manager.
• Code non-compliance: Breach of the Insurance Business or General Insurance Mediation Codes is not itself an offence but is a ground for regulatory action including additional permit or registration conditions, directions, financial penalties, or cancellation or revocation of authorisation.

Fee-related charges

• Late payment and filing: JFSC fee notices provide for a late payment surcharge (proposed at 5% for insurance business; 5% per month for general insurance mediation) and late filing fees of 100 pounds per month for documents, including supervisory risk data, not filed by the due date. The specific insurance business figures appear in a 2021 consultation and are proposals rather than confirmed rates.

Sources: Financial Services (Appointment of Manager) (Jersey) Order 2008 · Financial Services Commission (Jersey) Law 1998 · Financial Services Commission (Financial Penalties) (Jersey) Order 2015 · Insurance Business (Jersey) Law 1996 · Insurance Business (Appointment of Manager) (Jersey) Order 2008 · General Insurance Mediation Business Code of Practice · Insurance Business Code of Practice · Feedback on Consultation No.11 2023 · Feedback on Consultation No. 13 2022 - General Insurance Mediation Business and Money Service Business Fees · Consultation No. 5 2021: Insurance Business Fees · Mr Justin Krzysztof Jozef Nicpon (R) (2012-02-03)