AUSTRALIA’S second-largest local government has established a captive insurance company in Guernsey. The Gold Coast City Council employs 2,500 staff and serves 500,000 residents on the popular stretch of Queensland coast.

Its insurance company started trading in July after a rigorous selection process of its favoured jurisdiction.

GuernseyFinance chief executive Peter Niven said it was a major endorsement of the island’s ability to deliver captive insurance as a risk management solution.

‘Our high quality offering includes a highly skilled, professional and experienced industry and a first class regulatory environment.’

Gold Coast City Council Insurance Company is being administered by Heritage Insurance Management. It is the firm’s second major Australian client.

Managing director Charles Allen said: ‘The selection process was one of the most rigorous we have experienced but we are looking forward to working with them to make this a successful and effective venture.’

In the Australian system there are three levels of government – federal, state and local – with each centred on a body democratically elected by the people as their representatives.

Gold Coast Council is a local government, often seen as being the most accessible to the people.

Its chief executive, Dale Dickson, said: ‘Council is always looking for ways to improve its services and to reduce the cost of providing them to more than 500,000 residents and the captive gives us an opportunity to reduce our insurance costs.’

Gold Coast City Council is the first in the country to form its own insurance company. But Mr Dale said there had already been a lot of interest expressed by others and it was likely some would follow suit.

Following a feasibility study conducted by its insurance advisers, Miller & Associates Insurance Broking, the council decided to establish its own wholly-owned insurance company, giving access to the reinsurance market in London.

Mr Niven said the majority of captive insurers were established in offshore jurisdictions because of the ease of set-up, low cost bases, expertise in managing captives and legislation tailored to captives’ needs.

‘The council considered several jurisdictions including Bermuda and Singapore, but selected Guernsey as the most suitable domicile,’ said Mr Niven.

Mr Dale said: ‘As a public body we have to comply with the council’s corporate governance controls and we chose Guernsey as the captive domicile that is best able to meet our needs.’

Steve Butterworth, who recently retired after spending 20 years as director of insurance at the Guernsey Financial Services Commission, is chairman of the company.