The European insurance market is facing a period of stabilisation in premiums for several risk classes, however this factor did not stop continued growth in the global and European captive insurance market.
Establishing captives emerged as an increasingly popular strategy, complementing conventional insurance by allowing organisations to create entities to self-insure their risk.
According to Business Insurance, captives now account for 25% of the global commercial insurance market, driven by high price, restrictive terms, and limited capacity from traditional insurers. This trend has invigorated the captive industry in Europe, which is increasingly supported by favourable legislation and regulatory frameworks.
The growing captive trend across Europe could inspire more countries in the continent to introduce their own captive legislation in the coming years. Meanwhile, we’re seeing firms with existing captives exploring relocation options to best align with their evolving risk profiles and the potential advantages of newer domiciles.
To help you understand changing conditions for captives in Europe, in this article, we run down the key existing and emerging domiciles for consideration in your next captive move.
Existing European captive domiciles
- Luxembourg remains the largest captive reinsurance hub in the EU, with 195 reinsurance captives at the end of 2023.[1] Its strong regulatory framework, managed by the Commissariat aux Assurances (CAA), and attractive equalisation provisions ensure its continued appeal.
- Ireland, with 65 captives at the end of 2023, has built a robust financial services ecosystem over three decades since the first captive license in 1989.[1] It applies Solvency II regulations proportionately via the Probability Risk and Impact System (PRISM), making it a favourable choice for both direct insurance and reinsurance captives.
- Malta distinguishes itself as the only EU member state offering Protected Cell Company (PCC) legislation. PCCs provide cost-effective, Solvency II-compliant solutions and direct EU market access. By 2023, Malta hosted 21 pure captives and 79 captive cells.[1]
- Switzerland, though outside the EU, offers streamlined processes for establishing reinsurance captives. Its Swiss Solvency Test (SST) aligns with European standards while simplifying requirements for captives. By December 2023, Switzerland had 25 captives.[1]
- Guernsey, Europe’s largest captive domicile, housed 199 pure captives and 123 cells by early 2024.[1] Not bound by Solvency II, Guernsey offers flexibility and innovative frameworks like its pre-authorisation scheme for insurance cells, supporting rapid captive formation.
- Gibraltar, with more than 50 years’ of experience in captive insurance and its first captive establishment in 1967, had 10 captives and 27 cells at the end of 2023. Gibraltar is developing a post-Brexit ‘dual captive regime', with the hope that this new framework would allow Gibraltar to continue operating its UK-facing business, while also making the most of this new opportunity for growth and giving greater flexibility for international business.
- Isle of Man supports various structures, including PCCs, and provides proportional solvency requirements alongside infrastructure for loan-back arrangements. As of early 2024, the island hosted 90 pure captives and seven cells.[1]
