Some new proposals put forth by the Australian insurance industry may mean increases in the number of captive insurers choosing to domicile there, and the return of companies that have gone offshore to Singapore, Bermuda and elsewhere.
According to a report from Reuters News Agency, Australia is currently home to 56 local captives and about 40 more based off shore, but regulatory changes, if passed, may open the way to as many as 400 in the next few years.
Tony Cope of Aon Risk Services Australia Ltd. told Reuters, “As they take the regulatory barriers away in Australia, I’m sure you’ll see a hell of a lot more companies writing their own risk.” So far the country has no specific legislation governing captive insurers, and the deductibility of premiums remains an issue.
Reforms in 1997, however, permitted captives to cede 90 percent of their premiums to reinsurers, and encouraged speculation that additional measures would be taken to welcome captives, and keep their operations within the country.
The Australian Prudential Regulation Authority is considering a number of changes involving the regulation of the insurance industry, which it hopes to complete by June 2001. While it hasn’t so far adopted any specific rules for captives, it is apparently considering special treatment for them.
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