Peter Mullen, CEO of captive and insurance management at Aon Risk Solutions
Brexit will make many captive owners look carefully at the options available to them, according to Peter Mullen, CEO of captive and insurance management at Aon Risk Solutions.
Some of these options could include using a front, moving to a different domicile, setting up a second captive, exploring other risk retention options, amongst others, Mullen said .
Despite the uncertainty that still surrounds Brexit, Mullen stressed that captive owners must prepare thoroughly during the next two and a half years before Article 50 is enforced and Brexit begins.
“When making contingency plans it’s probably best to assume a hard Brexit at this point. A hard Brexit is likely to mean for captives established in the EEA, losing the ability to issue policies directly into or out of the UK,” Mullen told Captive International.
“Contingency planning should be done under various risk headings including regulatory, legal, tax and data related issues.
“For captive owners it’s also important to analyse their UK risk profile as this could change in material ways post-Brexit. This is likely to be a more complex analysis than developing a captive contingency plan,” Mullen added.
“For example, when considering changes to the freedom involving the movement of goods where the client manufactures in the UK and exports to Europe, the imposition of trade barriers or tariffs could result in increases in the cost of production, compliance, outsourcing etc.
“There could be a loss of competitive advantage and reduced market share which in turn will be reflected in reduced revenues, earnings and perhaps reputation. We have a lot of clients engaging with us on this basis right now,” Mullen concluded.
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