AIRMIC's captive focus group is to draft AIRMIC's comments on the impact on captives of Solvency ll, the planned European prudential regime for insurance companies currently under discussion. The issue arose after a study by a sub-committee of the Dublin International Insurance & Management Association had concluded that under Solvency II, capital requirements could increase over a range from 70% to more than 1,300%.
There is mounting evidence from other quarters, also. The Luxembourg-based Association of Reinsurance Managers concluded that significant increases in capital requirements under Solvency II threatened to drive small insurance companies and captives out of the European Union to other domiciles.
The captive focus group will consider these studies, and issue a response after consulting with members. Its chairman, Julian Cowburn, points out that a paper issued by the International Association of Insurance Supervisors in October 2006 recommended that it would be ‘unreasonable for solvency levels that would be applied to a commercial insurer to be applied to a captive.’