France’s Ministry of the Economy and Finance is developing a legislative and legal framework to create a more welcoming environment for captive insurers domiciled in France.
Historically, French organisations have typically utilised Ireland, Luxembourg, Switzerland and Malta for their captive insurers with the former two regulating the majority.
Five existing captives are thought to currently be domiciled in France, including AXA Global Re and a captive formed in early 2020 for payment services giant Worldline Group.
The French Association for the Management of Corporate Risk and Insurance (Amrae) has long campaigned for a more captive friendly regulatory environment in France and GCP Insights understands the Association is optimistic about the latest signals from the government.
Speaking on GCP #45 in December Fabrice Frere, managing director within global risk consulting for Aon in Luxembourg, said he would welcome the addition of France to the options of domiciles in Europe, but the French Prudential Supervision and Resolution Authority would have to prove itself as a reliable, long term partner of captives.
“The approach of the regulator, the proportionality given to captives, the facility given to captives to have an outsourced model and the governance framework that will be imposed,” Frere said.
“All of those elements will be key to determine how competitive France is as a captive domicile and how easy it is for French clients to set up their captives in France.”
Any French captive regime would have to follow Solvency II as all EU jurisdictions do, but the ability to build up equalization reserves could be adopted making it more comparable to Luxembourg as a captive domicile.
Regarding the potential for existing French-owned captives domiciled elsewhere to consider re-domesticating in the future, Frere said he did not believe there would be a rush to do so.
“Some of the clients are in specific domiciles for specific reasons. For example, in Dublin being able to write direct across Europe and access to the United States is driving a lot of the activity there, in Luxembourg being able to build eligible capital when you have very high catastrophe risk exposures,” he added.
“France will be on the list in the domicile comparison and when clients are assessing their strategic options, depending on what they want to do from a risk management and insurance underwriting perspective, we will have to compare France to some of the other options to make a decision.”