The Federation of European Risk Management Associations (FERMA) has launched a campaign to change tax authorities and other public bodies’ misperceptions about captive insurance.
To kick off the campaign, FERMA has released a position paper on captive insurance companies and the advantages they have on the European economy.
The paper will also be submitted to the Organisation for Economic Co-operation and Development so that the views of European risk managers are considered when discussing the implementation of base erosion and profit sharing (BEPS).
The paper stated: “FERMA believes it is crucial that tax authorities understand the positive technical risk management aspects that captives can represent for multinational organisations.”
“Although FERMA is convinced that EU domiciled captives will pass the BEPS test, the administrative costs of owning a captive are very likely to rise. As a consequence, there will be an increase in the total costs of doing business that will not help accelerate economic growth.”
FERMA has also asked its 22 member associations across Europe to share the position paper with national tax authorities to explain the real value of captives, as they will be responsible for deciding the implementation of BEPS measures.
The paper will also be brought to the attention of the European Commission and Parliament, and the European Insurance and Occupational Pensions Authority stakeholder group, to increase their understanding the role captives play in the European economy.
It will help inform the group on how a captive can help improve European businesses and some of the advantages captives have such as being Solvency II regulated.
Jo Willaert, the president of FERMA, said: "We find it ironic that Solvency II was designed to include as much as possible captives as normal regulated insurance companies, despite requests from the risk management community for more proportional regulation, and now BEPS and commission initiatives are differentiating captives from the rest of insurance companies."
