France potential trailblazer as more European regulators eye captives

Some key new developments can be seen in the European captive insurance market including interest from new regulators, according to a panel session entitled “View from across the pond” at the 2024 CICA conference. 

The panel included Hamish Champion business development lead at Aon and a member of the Guernsey International Insurance Association, and UDO Kappes, head of insurance RWE AG, and chair of the European Captive Insurance and Reinsurance Owners’ Association (ECIROA).

He said that ECIROA is trying to educate a number of European regulators, currently without appropriate regulation for captives, about their merits. There are still some regulatory queries around captives that are getting addressed, he said. 

Kappes said that, after years of little growth and no new domiciles in Europe, things are changing. France is seeing the most interest, and that this might be a trailblazer. It is having some serious conversations about creating captives. 

Once regulators feel more comfortable with captives, a wider range of captives could be created or even move to France, the panel agreed. 

However, although the UK, Spain and Italy also showing interest, Kappes suggested France is ahead of those countries in terms of real legislation. Despite that he added the caveat that this could change quite quickly if other regulators move fast. 

Champion said that it might be a bit too early to say what the impact of the UK interest might be, but stressed that Guernsey was not being complacent at all about losing captive business to the UK. He did however welcome the interest showed by the UK, as it would give clients more options. 

Champion said that the captives in Guernsey, mostly owned by UK based companies, include some very diverse companies. The panel said that there were 199 captives registered in Guernsey at the end of 2023, the highest in Europe, followed by Luxembourg with 195. 

Asked why captives would register in Guernsey, Champion highlighted the fact that Guernsey regulators are supportive of captives and allow a high speed of response in setting up captives on the island. 

Guernsey also has flexibility about the kind of captives that can be set up on the island. 

Gibraltar might follow a similar line, but has some differences, including the fact it is in the Solvency II regime, Champion noted. 

Kappes said that Luxembourg’s regulators are also very flexible & responsive. Luxembourg is a central location in Europe – it borders France, Germany and Belgium. 

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