Tag Archives : EIOPA

FERMA speaks out to change misperceptions of captive insurance

FERMA has launched a campaign to change misperceptions of captive insurance by tax authorities and other public bodies.

Click here to read the position

Click here to read the position

As a starting point, FERMA has today published a position paper on captive insurance companies, which it will submit to the OECD so that the views of European risk managers are considered when the OECD discusses the implementation of its Base Erosion and Profit Shifting (BEPS) measures with member governments.

FERMA will urge its 22 member associations across Europe to use the position paper to approach their national tax authorities, who will be responsible for deciding how to implement the BEPS measures, to explain the real risk management value of captives.

In light of the latest corporate transparency and anti-tax avoidance measure at European Union level, FERMA will also reach out to the Commission and Parliament to increase their understanding of the role of captives in the European economy. This follows the adoption in July of the Anti-Tax-Avoidance (ATA) Directive by the Council of the EU.

Jo-WillaertJo Willaert, the President of FERMA, said: “Captives serve an important enterprise risk management role for European business and other organisations. We believe it is important that EU tax authorities understand better how European captives operate to preserve these risk financing capacities. This is not about tax, but a fear that the administrative costs of owning a captive will become uneconomic.

FERMA will also raise the issues at the European Insurance and Occupational Pensions Authority (EIOPA) stakeholder group through its representative Marie-Gemma Dequae.

Key points in the paper include:

• Captive insurance enables European businesses to increase their capacity to take risk;
• The parent company gets a tailor-made risk coverage and pricing, and it can target risk reduction more effectively thanks to better loss information;
• Captive insurance contracts are genuine risk transfer transactions with pricing based on the same approaches as commercial insurers;
• European captives are regulated as other insurance entities under Solvency II;
• Many aspects of captive operations, such as the payment of insurance premium tax in source countries, demonstrate their genuine, non-tax functions.

Said Jo Willaert: “We find it ironic that Solvency II was designed to include as much as possible captives as normal regulated insurance companies, despite requests from the risk management community for more proportional regulation, and now BEPS and Commission initiatives are differentiating captives from the rest of insurance companies.

BEPS and EU anti-tax avoidance and financial transparency initiatives will be the subject of a risk managers only discussion at the FERMA Seminar in Malta on 3 and 4 October. There will also be a presentation on captive insurance and cells in Malta. For more information, see http://archives.ferma.eu/ferma-seminar-2016/


Solvency II: Spotlight now turns on national regulators

Consistent implementation of Solvency II across the EU is the only guarantee that European insurance buyers will benefit from a new level playing field to optimise the protection of their organisation.

Because regulators have now a key role in the local enforcement of Solvency II, this is where our attention should be in 2016. The interpretation and local adjustment will play a fundamental part in how Solvency II will be perceived by the sector.

Since 1 January 2016, the rules set by the Solvency II Directive have been officially the new regulatory regime for the insurance industry in the European Union. The Directive has been transposed and implemented into the national laws of the 28 EU member states. From the adoption of the Directive in 2009 until the latest amendments in 2014, it is now up the national regulators to apply and enforce the new rules.

EIOPA offices in the “Westhafen Tower” - Frankfurt

EIOPA offices in the “Westhafen Tower” – Frankfurt


Solvency II also came in 2014 with a detailed text called a delegated act which specifies with further details how the national authorities will have to understand and effectively put into place the capital, governance and reporting requirements.

It remains to be seen how the local regulatory authorities will handle the additional workload. The new reporting rules and the documentation will require a lot of resources to be assessed and used properly. This is the necessary condition to turn the new regime into a really meaningful exercise and grasp the full potential of Solvency II.

The newly needed resources, however, are likely to increase the fees that most supervisors impose on insurers. With its privileged position and access to all EU local insurance supervisors, the European insurance and pensions authority, EIOPA, will have to monitor closely the impact of Solvency II in terms of the regulation costs for the whole industry.

EIOPA also announced that the principle of proportionality set forth by the Directive will be scrutinised to monitor how local regulators have translated and defined what is a captive and how the principle of proportionality should be applied to the eligible entity (Keynote speech of Gabriel Bernardino, Chairman of EIOPA, “Implementation of Solvency II: The dos and the don’ts” – International conference “Solvency II: What Can Go Wrong?”, Ljubljana, 2 September 2015).


Solvency II and the treatment of third country jurisdictions

Because insurance is a global industry, the Solvency II regime (entering into force on 1 January 2016) includes some provisions regarding the recognition of third country jurisdictions as offering an equivalent level of supervision. For FERMA, an equivalence decision means an easier access to insurance capacities.

The process leading to the Solvency II equivalence of the insurance supervisory system of a third country jurisdiction is conducted by the European Commission in cooperation with EIOPA, the European insurance supervisor. Continue reading


Former FERMA President representative to EIOPA

Former FERMA president Marie-Gemma Dequae has been named to represent the interests of professional associations on the insurance and reinsurance stakeholder group for the European Insurance and Occupational Pensions Authority (EIOPA).

Marie-Gemma says, “I look forward to exchanging views with colleagues at the stakeholder group and bringing risk management aspects into the proposed regulatory technical standards and their implementation. I will be discussing and defending the important needs of our members, as industrial buyers of insurance and reinsurance, and taking care of the influence of changing regulations on available insurance capacity and price for changing and emerging risks. “As FERMA members often have their own captive (re)insurance companies, the discussion on the Solvency II implementation will be followed with great care taking this captive aspect into consideration.” Continue reading


Solvency 2 back on track for 2016

The European Commission officially proposed a new “go-live” date for Solvency 2 set for 1st January 2016 with a draft Directive (a.k.a. Quick-Fix 2) that was published on 2 October and is giving the necessary, but tight, space to finalise all the details of the new European insurance regulatory framework.

One month later, on Wednesday 5 November, with this new delay officially set, a trialogue session between the European Parliament, the Council and the Commission took place and struck an agreement on the Omnibus 2 text. Continue reading


Interview with Jorge Luzzi

Interview with Jorge Luzzi, FERMA’s President. Continue reading


The year in review

FERMA has accomplished an enormous amount during the two years that I have been its president. Our starting point has been the question from the board – how can we continue to strengthen the voice of risk managers in Europe? Continue reading