When I arrived in Guernsey from London in 1995, it was as part
of the upskilling of the insurance industry here in response to
changing sensitivities of the UK taxman. In short, the captive
industry needed to adopt proper underwriting processes and
appropriate transfer pricing of risk in order to satisfy the UK
Revenue that captive insurance companies were not simply being used
to accumulate untaxed Group funds for tax avoidance or deferral
reasons.
This was in spite of the common view already prevalent with the
industry locally that captives were strategic risk financing tools
for which tax was a consideration but not a raison d'etre, a
view impressed on me on day one by my new boss.
