The newly elected Minister for Financial Services for HM Government of Gibraltar, the Hon Nigel Feetham (pictured) is well-acquainted with wearing multiple hats at once.
A published author and a lawyer by profession, the MP and King’s Counsel has been a devotee of the financial services sector for some 30 years, 27 of which he has spent focused on the insurance market. As minister for financial services, he said, his portfolio of responsibilities includes oversight of gambling and gaming, and the justice system in Gibraltar, including the courts, police and prison service.
Only days into office, Feetham hit the ground running with a programme of London-based events aimed at showcasing everything Gibraltar has to offer as a financial services hub. Key topics on the agenda included events touching on four sectors of the financial services industry – insurance, fintech, private clients and funds.
Speaking with Insurance Business after hosting the insurance networking event, Feetham emphasised his passion for the insurance sector and shared insight into the rich history it has enjoyed in Gibraltar. Its origins hail back to the commitment to a common market between Gibraltar and the UK as part of Gibraltar’s membership of the European Union, he said, as made by the then Chancellor of the Exchequer to the then Chief Minister of Gibraltar in 1996.
He noted that he was involved in the process as a young lawyer advising the regulator at the time on the practical implementation of the European passport. The focus back then was on marketing captives, he said, as Gibraltar didn’t have an insurance industry as such. The breakthrough moment came in 2001 when the first open-market insurers started setting up there.
“The first open-market motor insurer to set up in Gibraltar was Markerstudy, a UK broker that set up an underwriting subsidiary in Gibraltar in 2001,” he said. “They later set up a number of subsidiaries, but the first one was in 2001. Admiral also set up an underwriting subsidiary in Gibraltar in 2002 then we had Saga do the same.
“And it started something which is the common theme in all my books – the concept of jurisdictional competition and what makes jurisdictions competitive out of proportion to their size. Clearly, Gibraltar is a small jurisdiction but it punches well above its weight. I call it the herd instinct, all it takes is for one big player to come into the jurisdiction and then the herd takes notice. And invariably, the herd follows that first big player.”
That is exactly what happened in the insurance sector of Gibraltar, he said, and as a result, the sector has grown to a level where it has become an essential part of its financial services industry. As it stands, Gibraltar licensees collectively account for an incredible 30% of the UK motor market, 20% of the UK pet insurance market and 30% of all the travel intermediated business sold in the UK.
While these are very positive metrics, Feetham said, he’s a firm believer that diversification is the key to reducing risk and he’s determined not to let Gibraltar’s insurance market rest on its laurels.
“As the new Minister for Financial Services, I want to try to do two things,” he said. “One is to diversify away to other international markets beyond the UK. The UK has been a very successful market for us because we have that common market between Gibraltar and the UK. But as a result of Brexit, we could have lost access to that market.
“The UK government gave the Gibraltar government reassurance that we would continue to have market access and we have. But I want to make sure we don’t have that level of concentration risk going forward, so therefore we want to open up new markets.”
High on the agenda he laid out in his pre-election manifesto is a commitment to setting up a new ‘dual captive regime’ in Gibraltar. Because Gibraltar is no longer part of the European Union, he said, it has the opportunity to set up a standalone capital regime for businesses that are not UK-focused and implement its own solvency regime. The ambition is to have legislation – at least in draft form – for this in place by the end of the year.
“The other thing that we want to do is to diversify away from motor insurance,” he said. “And therefore I am proposing that, as a jurisdiction, we focus on other areas. One of the areas that I’m very keen to develop is the life sector, more specifically, the sector of pensions business.
“There is a live application before the Financial Services Commission at present, which I think will be followed by other applicants, as a result of that herd instinct. And that could be a potential economic sector for Gibraltar in years to come. So, those are my twin pillar policies for the government of Gibraltar - diversification and moving away from the concentration risk of the motor insurance sector.”
Three decades of serving and supporting the financial services sector of Gibraltar have given Feetham enough of a run-up that the rate of change he’s pursuing is nothing less than transformative. Rather than thinking of a great first year, he said, it’s better to think of a great first three months, as he’s looking for rapid progress towards his stated ambitions.
“If I can I want to have a clear framework for my captive regime in in place three months' time, by the end of the year,” he said. “[..]I would also like an applicant to have gone through the application process of being licensed in the jurisdictions that I’ve mentioned as being key to the diversification strategy of our financial services sector in Gibraltar.”
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