Valérie Scheepers, head of the non-life and reinsurance department at the Commissariat aux Assurances, has said the regulator is open to discussing the possibility of introducing protected cell companies (PCCs) in Luxembourg if there is industry demand.
With Gibraltar leaving the European Union with the United Kingdom post Brexit, Malta is now the only EU state that has PCC legislation. The concept has proved popular in the domicile with 14 PCCs currently active.
Speaking in an interview on episode 82 of the Global Captive Podcast, Scheepers said the onus was industry to present a real business case so rules could then be developed.
“We are absolutely open to the development of new activities if there is a real demand for it,” Scheepers said.
“We have a preference for developing the rules when dealing with practical cases. Otherwise, we have the risk of having an overly burdensome and not appropriate regulatory regime.
“So should we receive a case, then we will consider it. We are absolutely open to it, but we we need a practical case.”
One of the sticking points for developing an attractive PCC offering in Luxembourg is the fact that the regulator is most comfortable regulating reinsurance captives, rather than direct writing captives which cells are often used for.
If a direct writing captive is established in Luxembourg, then the CAA requires it to be supported by a reinsurer.
“It might be a challenge for us because we prefer to have a composite of a direct captive and then the reinsurance after,” Scheepers added.
“But, once again, if we have an example we are really open to analyse it. But as of today, we were not approached with a real case.”
There was nine new reinsurance companies licensed in Luxembourg during 2022, bringing its year-end total to 195. The vast majority of those are captives.
Although applications to form this year would usually begin arriving in the summer, Scheepers said 2023 is already proving “very much different”.
“We already have now regular meetings with new candidates,” she added.
“The demand is quite high, we see it, it’s clear, and it starts early in the year, so that it is very likely that 2023 will be even better than 2022 in the creation of new companies. So I am quite positive at the moment.”