From: Captive Insurance Times
The Federation of European Risk Management Associations (FERMA) has called for captives to be automatically classified as low-risk profile undertakings in the European Commission’s review of the Solvency II regime.
In its position paper, FERMA says it “welcomes the significant strides made in the Commission’s proposed amendments to Solvency II in regards to proportionality, in particular the new classification of ‘low-risk profile undertakings’”.
This includes the Commission’s formal recognition that captive insurance and captive reinsurance undertakings present a specific risk profile that must be taken into account when defining some requirements.
However, the association continues that the regime could be further amended to reduce complexity for small insurers.
The position paper states: “We believe that Solvency II could be even more proportionate for captives, which both operate in a very specific risk profile and provide European enterprises with a different option of risk transfer, which is crucial in current market conditions.