FERMA Lauds EU Action on Captives

The Federation of European Risk Management Associations (FERMA) has issued a bulletin welcoming the vote by the European Parliament on October 7, which endorsed a “vast majority of the special amendments regarding the special status of captive insurance and reinsurance companies under the Solvency II Directive for the prudential regulation of insurance.”

Thierry van Santen, FERMA Director with responsibility for European affairs, commented: “Thanks to this vote, captives, under certain conditions, will not only benefit from a simplified solvency regime, but are also now officially recognized by European regulation as a specific risk financing instrument, useful for European industry.”

The special provisions that FERMA has been calling for on EU-based captives was a topic for discussion at its conference, held last week in Brussels. They are of particular interest to Ireland, Luxembourg and Malta, all of whom have created a substantial market in captive formation and administration.

Van Santen called the EU Parliament’s action a “great victory for the FERMA members.” He noted that the “Solvency II Directive originally had the same treatment for all types of insurance and reinsurance companies. It was FERMA who brought the captive issue to attention of the European Commission more than one year ago and then to the regulators through the Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) and the European Parliament rapporteur.”

He went on to describe the vote as a “critical step. We have now good reasons to anticipate an endorsement from the European Council of the text as it is. But,” he warned, “the game is not over.

“We have now to work with CEIOPS on the implementation phase. Thanks to the 100 captives companies who responded positively to the FERMA’s call to participate on the fourth quantitative impact study for Solvency II (QIS4), we are in a strong position to work closely with the CEIOPS on the implementation details. Those who attended the FERMA seminar last week in Brussels have seen the high level of positive cooperation that FERMA has with CEIOPS and the European Commission, and we are quite confident about the final outcome.”

Van Santen concluded his statement with by thanking “Florence Bindelle, the executive manager of FERMA, and Guy Soussan, from STEPTOE, our legal advisors on European affairs, as well as the captive management associations who give us a significant support in this process.”

Source: FERMA – www.ferma.eu

Topics Europe