European regulators set to ease requirements for captives

TUCSON, Arizona – European captive owners face significant regulatory hurdles, but potential changes could reduce the number of filings companies need to make, and the growing number of domiciles in the region could help stimulate more growth, a panel of experts said.

The hard insurance market continues to drive interest in captives in Europe, and companies are looking to use captives more effectively to cover emerging exposures, they said Monday during a session at the Captive Insurance Companies Association 2025 International Conference.

Since the implementation of Solvency II in 2016, the European Union’s capital regime for insurers, captive regulation has become more complex, said Udo Kappes, Essen, Germany-based head of insurance at RWE AG, an energy company.

The regulatory regime, though, has been revised to ease requirements for small and noncomplex entities, which will likely include most captives, he said.

Changes, which will likely take effect next year, could include changing the frequency of some detailed filings currently required to be submitted annually, Mr. Kappes said.

While Europe is a mature market, it takes longer to form a captive than in the United States, where some captives can be formed within 30 days, said Nancy Gray, regional managing director, Americas, at Aon PLC in Burlington, Vermont.

European captive owners, though, are looking to make more use of their captives, she said.

“There’s this desire to look at what else can I do with my captive. I have a captive; it met a need in terms of when it was originally established, so now let’s take a look in terms of how I can further use this captive, whether it’s through international employee benefits, cyber or some other lines of business,” Ms. Gray said.

European owners are also seeing more domiciles, she said. For example, France recently became a captive domicile, and Italy, Spain and the United Kingdom are considering captive legislation.

The growth in European domiciles could fuel more captive growth, said Caroline Wagstaff, CEO of trade association the London Market Group.

“There is definitely still some reputational risk in having your captive somewhere that is not your home state,” she said.

In addition, small and medium-sized companies may not have the resources to establish an offshore captive and may be more willing to set a captive in their home domicile, Ms. Wagstaff said.

“More domiciles doesn’t mean anyone’s eating anyone’s lunch. There’s a bigger cake for us to all share,” she said.