Source: Thomas Stibon¸ PKF Malta¸ June 2013
Captive insurance companies are typically formed in countries that have laws allowing for the establishment of a captive insurance company. These locations are known as domiciles. The choice of domicile for the incorporation of the captive insurance company will depend on many practical considerations affecting the business concerned. Domiciles in the EU such as Ireland¸ Luxembourg¸ Gibraltar¸ Sweden and Malta or in the US such as Vermont¸ South Carolina and Hawaii can have very different benefits and drawbacks to “offshore” domiciles such as Guernsey¸ Isle of Man¸ Switzerland¸ Bermuda¸ Cayman and Barbados. When making this decision the factors to be considered are numerous¸ these include:
- Whether the captive is to write direct or provide reinsurance
- The regulatory environment including the sophistication and reputation of the regulators for example – Solvency II¸ regulators response time
- Costs of creating and running the captive
- Minimum capitalization requirements – can vary widely from £100¸000 to £3m
- Taxes (local premium tax¸ federal excise tax¸ double tax treaties)
- Investment restrictions on the captive’s surplus
- Type of cover to be offered (whether a particular domicile offers unique advantages regarding a particular type of cover)
- Convenience – ease of travel¸ time zone.
The ultimate decision should be based on the parent company’s overall risk management objectives and the direction it wishes the captive to take and also how comfortable a parent feels with respect to the overall regulatory approach of a particular domicile.
To read more about the captives¸ visit our section Captive Insurance in Malta.
AND GUESS WHAT? MALTA APPEARS LIKE ONE OF THE BEST PLACE!
A recent article of the ‘’Time Of Malta’’ talked of PKF MALTA and his implication in the captive insurance. During a conference in London¸ Captive Live UK conference¸ PKF Malta and Risk Management Service (M