Supervisors get to grips with captives

The International Association of Insurance Supervisors (IAIS) approved an “Issues paper on the regulation and supervision of captive insurance” during its October meeting, held this year in Beijing. The paper has been drafted as a reference for supervisors explaining the history and nature of captives, their use and potential for misuse and the relationship between captives and the traditional insurance and reinsurance markets. It also addresses the main principles of the IAIS’s Insurance Core Principles (ICP) that apply to captives and in this extract we highlight how supervisors adapt their approach to the nature of the captive operations by looking at some of the key principles in turn.

Licensing (ICP 6). An insurer must be licensed before it can operate within a jurisdiction. The requirements for licensing are clear, objective and public.