Europe’s rich captive potential

“Potential” is a word that covers a myriad of elements in the world of insurance, many of which can be vague. However, in the case of Europe that potential is very real. Europe is one of the oldest centres of the insurance industry in the world and it would be fair to say that modern insurance as we know it was invented there.

So why is it that the European captive insurance market is only a fraction of the size of that in the US? There are a number of reasons for this, the main one being regulation. Although some domiciles are more open to captive insurance, such as Guernsey, Malta, and Gibraltar, others are not.

However, as this edition of Captive International’s Europe Focus touches on in a number of articles, there is a chance that this will change—and the catalyst for that is Solvency II.

Older members of the insurance industry will remember Solvency II with a mixture of resignation and bemusement, mixed in with a dash of exasperation. The EU’s proposed solvency regime for a huge section of the financial market, including insurers, was something that never seemed to stop looming on the horizon, like a storm that shifted and changed and just wouldn’t go away.

Solvency II was tweaked, re-proposed, amended, changed and generally was a headache for all concerned. When, at long last, it was finalised there was a sigh of relief for all concerned.

In 2022 Solvency II could undergo further tweaks on the part of the EU. There have been a number of ongoing discussions about this, with groups such as the Federation of European Risk Management Associations lobbying the EU about the kind of changes it would like to see, changes that could make it easier for captive insurers to be set up in domiciles that have not previously been considered by captives.

The discussions have largely been behind closed doors and the focus of the EU has been distracted more than a little by the ongoing war in Ukraine, but it is hoped that concrete proposals will soon emerge.