EIOPA Releases Opinion on Captive Reinsurance Supervision

The European Union's insurance regulator, European Insurance and Occupational Pensions Authority (EIOPA), has issued guidelines to standardize the supervision of captive insurers, aiming to prevent regulatory loopholes and promote uniform practices across the European Union.

On its website, EIOPA says it aims to provide fair and risk-based supervision of captive insurers, creating a level playing field through standardized practices while considering local differences.

Key aspects include ensuring proper risk management, governance, and oversight within captive insurance operations. The guidelines specifically cover the management and classification of cash pooling arrangements and emphasize the need for qualified board members. The opinion also reviews due diligence processes when outsourcing key functions to manage conflicts of interest and operational risks.

This move further legitimizes the captive insurance concept within the European Union, following new captive legislation in countries like France and Italy and potential growth and developments in other jurisdictions.