Solvency II has remained a prominent talking point within the insurance industry during 2014, with that likely to continue and even ramp over the next 12 months. With implementation scheduled for 1 January 2016, the window for captive managers to ensure compliance is fast closing.
However, not all questions of how Solvency II will translate to the captive space have been satisfactorily answered. Issues around cost of compliance, impact on investment and reinsurance strategies and potential incompatibility regarding the 99.5% confidence level required by the SCR calculation, to name just a few, are all still being hotly debated.
In this report Captive Review speaks to leading industry experts about the various challenges captive owners and managers will face with the introduction of Solvency II. We also study how the captive industry as a whole has matured and developed, with new opportunities on the horizon as captives begin to reach a wider audience.
The expansion of PCCs (Protected Cell Companies) has also been a feature of 2014 with their benefits of cost-effectiveness and rapid set-up, whilst still being Solvency II compliant, proving a strong pull for companies unwilling to commit to creating a fully-fledged captive.
Experts have emphasised the importance of having a robust, risk-based regulatory framework and the introduction of Solvency II is expected to provide this, without being onerous.
