Tag Archives : Reinsurance

Stating the Value of Captives

Captive insurance companies, especially in offshore domiciles, are under scrutiny from international tax authorities. As the financial or tax aspects of captives are increasingly likely to be challenged, risk managers will need to be able to demonstrate the added value of owning a captive to their senior management.

Since the publication of the OECD recommendations on Base Erosion and Profit Shifting (BEPS) in October 2015, more than 100 countries and jurisdictions have been collaborating to implement the 15 BEPS actions. The guiding principle of the BEPS initiative is to ensure “that profits are taxed where economic activities generating the profits are performed and where value is created”.

For risk managers, captive insurance is not a tax issue but an efficient risk management tool, especially for large corporations,” says FERMA President Jo Willaert.

Focus on captives is also coming from new European Union initiatives. In January 2016, the European Commission released an Anti-Tax Avoidance Package, now being discussed by the Council. A Public Tax Transparency proposal followed on 12 April 2016, extending country-by-county reporting to all large corporations operating in the EU.

Figures in context

Country-by-country financial and tax transparency are raising concerns for the captive industry. If made public, country-by-country financial and tax disclosure would give access to a large amount of highly technical information. A meaningful reading and interpretation of this information require a detailed understanding of the value chain in a group; many factors contribute to the creation of value and income in a multinational.

Tax authorities are competent to perform this analysis because of their expertise and training, but the same does not necessarily apply to members of the public. Risks of misunderstanding and misinterpretation, therefore, will be significant, forcing organisations to defend and justify their financial structures not only to tax authorities, but to less informed third parties.

With nearly 7,000 captives worldwide, the risk management community is well aware of the reasons and benefits of captive insurance, which is used by non-profits and public organisations as well as corporations,” says Jo Willaert. “These are light structures which perform a genuine (re)insurance activity. They help us to maintain affordable and wide risk coverage, access to reinsurance markets and greater risk insight.


FERMA proposes modifications to Brazilian reinsurance regulations in the interest of business and insurance buyers

The Federation of European Risk Management Associations (FERMA) has sent specific recommendations to the Brazilian insurance regulator SUSEP to limit the impact of regulations 225 and 232 on market capacity and security in the interest of business and insurance buyers. FERMA’s action follows an offer from SUSEP to open discussion with critics of the regulations which went into effect earlier this year. Continue reading


FERMA Response to SUSEP

FERMA Response to SUSEP Continue reading


FERMA Forum opening remarks

The president of the largest organisation of European risk managers today (Mon) called on reinsurers to work with their ultimate customers, corporate insurance buyers, to develop solutions for the risks highlighted by the spate of natural catastrophes over the last two years. Opening the 2011 Risk Management Forum of the Federation of European Risk Management Associations (FERMA), the President Peter den Dekker said reinsurers needed to understand how business models had changed so they could support insurers in devising innovative solutions to risks that companies face now and will do in future. Continue reading


Brazilian reinsurance regulations have improved but still need to be better

The International Federation of Risk and Insurance Management Associations (IFRIMA) welcomes the flexibility and understanding of the Brazilian government in responding to the world-wide concern about its new reinsurance regulations. At the same time, IFRIMA, which represents commercial insurance buyers from across the world, believes that more needs to be done to limit the negative impact on insurance capacity and cost. Continue reading


Brazil: A step in the right direction – more are needed

The Federation of European Risk Management Associations (FERMA) has welcomed as a good first step the response of the Brazilian government to complaints and concerns from
corporate insurance buyers and national and international reinsurance markets about restrictive executive orders rolling back liberalisation of the market. Continue reading


IFRIMA calls for reconsideration of Brazilian reinsurance market modifications

1) The new reinsurance beginning in Brazil
2) A partial return to the past without Parliament’s approval
Call to reconsider the resolutions Continue reading


FERMA calls for withdrawal of new Brazilian reinsurance regulations

The Federation of European Risk Management Associations (FERMA) has called on the Brazilian government to withdraw two new reinsurance regulations due to enter into force on 31 March 2011 because they threaten to reduce the capacity for coverage of large commercial risks and increase the cost of insurance. Continue reading