Guernsey was the first jurisdiction to introduce a PCC in 1997 and has been regularly using cell companies and refining the concept since then. A PCC is one company made up of a core and individual cells. With a PCC, unlike in an ordinary company where all assets and liabilities are linked, the assets and liabilities of the different cells will remain separate from each other so no claim against one cell will be covered by the funds of another. Guernsey has also introduced the ICC, which, like a PCC, has cells but they are separately incorporated and distinct legal entities.


The laws governing insurers conducting insurance business in or from within Guernsey is the Insurance Business (Bailiwick of Guernsey) Law, 2002 (as amended) (Insurance Law), the Insurance Managers and Insurance Intermediaries (Bailiwick of Guernsey) Law, 2002 and the Financial Services Business (Enforcement Powers) (Bailiwick of Guernsey) Law, 2020, which are also  supplemented by a number of rules, regulations and guidance notes including (but not limited to), the Insurance Business Rules, 2021, the Insurance Managers Rules, 2021, the Insurance Intermediaries Rules, 2021 and the Insurance Business (Solvency) Rules and Guidance, 2021, (as amended).

There are two main types of insurers licensed in Guernsey, international insurers and domestic insurers:

  • international insurers: who mainly underwrite non-local insurance risks; pure captive insurers and commercial insurers are the main types of insurers who fall within this category;  and
  • domestic insurers: who mainly underwrite insurance risks within the Bailiwick of Guernsey. Domestic insurers can be either locally or non-locally incorporated.

Insurers in Guernsey can be licensed to write either long term business or general business. Insurers writing long term business will be required to have policyholder protection, with an additional requirement to appoint an independent Guernsey based trustee who will report directly to the Guernsey Financial Services Commission (Commission).

Any persons wishing to be licensed as an insurer to carry on insurance business in or from within the Bailiwick of Guernsey must apply to the Commission for a licence.


When assessing applications for a licence to write insurance business, the Commission considers the application both against the minimum criteria for licensing, as set out in the Insurance Law, and the means by which the applicant will comply with all other requirements of the Insurance Law and its associated regulations, rules, codes and guidance issued by the Commission from time to time. Key considerations include whether:

  • the applicant will carry on its insurance business with prudence and integrity and in a manner that will not bring the Bailiwick into disrepute as an international financial centre;
  • fit and proper persons will be involved in ownership, management and control of the applicant and whether they will exercise probity, competence, diligence, experience and soundness of judgement in fulfilling their responsibilities;
  • at least two individuals are appointed, independent of each other and with appropriate standing and experience to direct its insurance business;
  • the applicant will conduct its insurance business in a prudent manner including maintaining sufficient capital base and insurance cover in an amount which the Commission considers appropriate; and
  • the applicant will maintain adequate capital and liquidity.


Any applicant seeking to obtain an insurance licence must apply to the Commission using the prescribed form and must provide the Commission with certain information, including:

  • the personal and professional details of the proposed personnel and third-party service providers of the applicant;
  • details of the proposed ownership of the applicant including an organisational chart identifying, in sufficient detail, all shareholdings between the applicant and its ultimate holding company and all material associated parties with whom the applicant will trade;
  • a statement explaining the rationale for setting up an insurance company in the Bailiwick of Guernsey;
  • details of the form of insurance business to be undertaken;
  • copies of the latest audited financial statements of the applicant and the applicant’s ultimate holding company and direct controller (where different);
  • a three year business plan in a format determined by the Commission;
  • details of the proposed method of capitalisation, whether by way of share capital, letter of credit, subordinated loans or otherwise and further confirmation that the proposed capital is in place and/or available to the applicant;
  • details of the proposed bank mandate signing powers of the applicant;
  • the constitutional documents of the applicant; and
  • the appropriate fee.

Additional information and documents may be required generally, in particular where the applicant, controller, or ultimate holding company is resident in a sensitive jurisdiction, as published from time to time by the Commission on its website.


With regard to the composition of the board of directors, the Insurance Law requires that the board of directors of an applicant includes at least one director who is not an associate of, or associated party in relation to, the applicant (other than as a director) and who is not responsible for the management of the applicant’s business, unless the Commission has agreed in writing to waive this requirement.

In addition, the Commission expects there to be at least an equitable balance between local and non-local directors and that control of the board of the applicant and the monies of the applicant will reside in Guernsey. The policy of the Commission is that corporate directors are not permitted.

A licensed insurer must also appoint and must at all times maintain the appointment of a general representative to act on behalf of the insurer. The general representative must be:

  • an executive director (or in certain circumstances an employee or agent) of the insurer ordinarily resident in the Bailiwick of Guernsey and approved by the Commission as fit and proper to act as the general representative; or
  • a licensed insurance manager approved by the Commission.

The Commission also requires all current and proposed directors and the general representative of prospective applicants to fill out a personal questionnaire regarding their qualifications, experience and legal and regulatory information, in the form found on the Commission’s website.


A licensed insurer carrying on long term insurance business must appoint a qualified actuary. Written notice of this appointment including the date of appointment and the name and qualification of the actuary must be given to the Commission.


A licensed insurer must appoint qualified auditors. Written notice of this appointment, including the date of appointment and the name and qualification of the auditors must be given to the Commission.


The licence shall (unless any condition of the licence provides for any other period of duration) continue to be valid until it is revoked by, or surrendered to, the Commission.


All licensed insurers are required to prepare an annual return in such form, containing such particulars and accompanied by such information and documents as the Commission may require. The relevant information required on the annual return are set out in the Insurance Business Rules and Guidance, 2021.

Typically, information on the relevant annual return includes the following:

  • up-to-date business plan;
  • completed declaration of reliance on reinsurers;
  • auditor’s management letter or confirmation of the general representative that the auditors have confirmed that no such letter is to be issued;
  • summary of the extent of adherence to the corporate governance principals set out in the Corporate Governance Code of licensed insurers;
  • declaration signed by the general representative;
  • explanation note on how reserves (including reserves of incurred but unreported) claims are calculated; and
  • financial information, including management accounts, summary of claims paid and outstanding and a schedule of bank deposits and investments broken down by asset claims.


Guernsey has in place economic substance legislation to address the concerns of the EU Code of Conduct Group for Business Taxation that certain Guernsey tax resident companies may be used to artificially attract profits that are not commensurate with economic activities and substantial economic presence in Guernsey. The Income Tax (Substance Requirements) (Implementation) Regulations, 2018 (Regulations), require Guernsey tax resident companies carrying on specified activities in respect of accounting periods beginning after 31 December 2018 (and every following accounting period) to demonstrate that they have substantive presence in Guernsey.

The relevant activities are: banking, insurance, fund management, financing and leasing, shipping, intellectual property, headquartering, distribution and service centres and holding companies (although holding companies are treated separately under the Regulations). The substance requirements vary for each key activity to reflect the different needs of the companies involved.

Essentially, such companies will have to demonstrate that they each have substance in Guernsey by (i) being directed and managed in Guernsey, (ii) having adequate people, premises and expenditure in Guernsey and (iii) conducting core income generating activities in Guernsey (CIGA).

Tax resident protected cell companies and incorporated cell companies are subject to the substance requirements if they have income from a relevant activity, but how the substance requirements are applied varies as follows:

  • a PCC is a single legal entity and, therefore, will be required to satisfy the substance requirements at a whole entity level including the activities and resources of all its protected cells (each cell will need to demonstrate that it conducts CIGA in Guernsey ). Each cell is not itself a body corporate and so its activities and resources form part of the overall substance information to be reported by the PCC and it is not required to report any substance requirements on its own account; and
  • an ICC is a legal entity and its incorporated cells are also separate legal entities. Given this, the ICC will only have to satisfy the substance requirements in relation to any activities it conducts itself and not for any Relevant Activities conducted by its ICs or taking into account any resources of its ICs. Each IC will have to satisfy the substance requirements in relation to its own activities and referring to its own resources without taking into account resources of any other ICs or the ICC itself.

Economic substance requirements that apply to companies now extend to partnerships. The reason is to fully meet commitments the States of Guernsey gave to the EU Code of Conduct Group (Business Taxation) in 2018.

These requirements apply to accounting periods commencing on or after 1 January 2022 for partnerships existing as at 30 June 2021. New partnerships (being those partnerships formed on or after 1 July 2021) will be in scope for accounting periods commencing on or after 1 July 2021.

A complete discussion of Guernsey’s economic substance requirements is beyond the scope of this Overview, please contact us if you wish to consider this further.


The Commission may, when granting a licence or at any time thereafter, impose conditions in respect of the licence as it thinks fit. Such conditions may apply to licensed insurers generally, to any class of licensed insurer or to any particular licensed insurer. Conditions may include limitations on the acceptance or carrying on of insurance business or prohibitions on the insurer soliciting (whether at all or in any specified manner) insurance business, either generally or from particular persons or classes of persons.

Guernsey as a jurisdiction

As a British Crown Dependency, Guernsey has a stable and reliable legal system.  With a long history of political stability, a highly respected regulatory framework and its accessibility via an established infrastructure make it a desirable international offshore destination for businesses.  Guernsey’s agile and pro-business government, low tax regime and compliance with international standards of regulation and transparency provide a secure and competitive choice for cell companies.

This Overview was last updated in January 2023. It is routinely reviewed by Appleby and updated when changes to the law require it. This Overview is for general guidance only and does not constitute definitive advice. Please contact one of our lawyers if you require more detailed information.

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