The pros and cons of offshore insurers

Offshore insurers are able to provide very competitive terms. But there can be a price to pay for lower cost insurance and you need to be aware of the pitfalls.

Offshore insurers are based outside the UK, in such locations as Gibraltar, Bermuda, Belize, The Cayman Islands and Ireland, which means it is impossible to assess their financial ability to meet claim liabilities. As they have no financial rating, it is very difficult to determine their financial strength, stability and security.

A number of offshore or unrated insurers have been stopped from arranging cover for UK companies, because of concern about their ability to pay claims.

Whilst they may be able to offer substantial advantages in terms of cost-savings and tax efficiency, offshore insurers are not registered with the UK regulator, which means policyholders do not get the same level of protection as they would if a company in any EU Member state ceased trading.

Already, a number of offshore or unrated insurers have collapsed or have been stopped from arranging cover for UK companies, because of concern about their ability to pay claims. Gibraltar-based Enterprise Insurance collapsed in October 2016. The Financial Services Compensation Scheme (FSCS) stepped in, paying over £26m in compensation to more than 30,000 policyholders, the majority of whom had their premiums returned. It was followed in November 2016 by the collapse of Liechtenstein-based Gable Insurance, for policyholders, the FSC stepped in once again. If your insurer collapses and they are not protected, not only will your premium be lost, but your policy will also be invalid and claims may not be paid.

Another factor to consider is that some large companies and contractors do not accept insurance cover from offshore markets, which means you may not be able to work on-site as you are not deemed to have adequate insurance in place.

Offshore insurers may be tax-efficient and appear to offer good value, but they can be unpredictable and may not offer the specialist cover you require. Willis Towers Watson Networks of which we are a Network Member deal only with top rated insurers. With many years’ experience and links to all the largest UK insurance companies, we are in an excellent position to negotiate competitive terms and prices, with no hidden surprises or risks involved. Talk to us today about your requirements and benefit from our tailored expertise, personal service and detailed knowledge of the insurance market.