Although the European Commission accepted that the future regulation of captive insurance companies should be proportionate to their type of business, the definition of a captive in Solvency II is narrow and likely to affect non-EU domiciled captive insurers significantly, Airmic believes. Airmic’s captive special interest group is preparing a response to the first consultative document specifically on captives under Solvency II, produced by the Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS). CEIOPS is responsible for producing detailed proposals for the implementation of Solvency II ahead of its coming into force in October 2012. The committee delegated the work involved in preparing the paper on captives to the UK’s Financial Services Authority (FSA).
According to Airmic’s technical director, Paul Hopkin, the principle of proportionality for captive regulation only applies to pure captives, in other words companies that write only the risks of their parent and only those within the EU. “We are still concerned how Solvency II will affect captives, especially outside the EU,” he said.