European captive insurance market soars as new jurisdictions compete
Captive insurer numbers are set to grow in Europe as more jurisdictions seek to lure companies, AM Best has claimed in a new report.
The rating agency’s new Best’s Market Segment Report is on Europe and it states that there has been an uptick in the number of captives domiciled in Europe, as existing domiciles remain popular and other jurisdictions put in place legislation to attract fresh companies.
“While European jurisdictions do not report captive numbers in a consistent manner, AM Best analysis suggests more captives were licensed in 2022 than closed, and early indications are there could be further growth in 2023,” the rating agency said.
According to the report Guernsey retook the top spot among European captive domiciles, adding 12 new captive licences during 2022 (three licences were surrendered), followed by Luxembourg and the Isle of Man.
Smaller established domiciles including Ireland and Switzerland also approved new captive licences during the year. Captive numbers in other domiciles including Sweden, Malta and Gibraltar appear to have remained broadly flat.
In addition to the established domiciles in Europe, AM Best also said that some larger European countries which have traditionally not had many captives are making a push to be more attractive to captives, especially those established by domestic companies.
France adopted new regulation to help captives establish domestically. France has one of the highest number of corporates with a captive, but up to now, most were domiciled abroad, in established captive domiciles. Since 2020, 13 captive insurance companies have been approved by the domestic regulator, nine of which are reinsurance companies. This trend is expected to continue, with the risk manager association AMRAE identifying over 50 French corporates with plans to set up a captive in France in the short to medium term. The new legislation appears to be appealing to companies outside of the country too, as illustrated by the recent decision by HDI Global SE to set up its alternative risk transfer (ART) activities in Paris.
“Potentially following in the footsteps of France, Italy and the UK are also considering ways to enhance their attractiveness as domiciles for captives,” the report also stated. “The City of London is exploring adopting a captive insurance framework, as part of the London Market Group’s roadmap to improving the business environment for risk transfer in the UK. In Italy, the domestic risk management association ANRA has been lobbying the insurance regulator to authorise and regulate captive insurers in the country. It has been reported that in 2023, a couple of Italian-owned captives began the process of re-domesticating back to Italy after negotiations with the regulator IVASS neared agreement.”
For more information contact AM Best.