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Mr Mahnke said that the risk management community must do better when it comes to articulating their wishes and concerns about regulation and legislation.
A big regulatory concern for German risk managers is Solvency II and how it is applied to captives when transposed into national law by all the different EU states. Somewhat alarmingly, the German financial regulator, BaFin, seems to have one of the strictest interpretations, essentially treating captives as conventional insurance companies and subjecting them to the full scope of Solvency II’s rules and requirements.
BaFin’s strict interpretation means a lot more paperwork for captives and, in the long run, there could be a negative impact on Germany as a domicile for captives, said Mr Mahnke.
“Is Germany still the best place for a German company to have its captive or are other jurisdictions more favourable? Luxembourg and Malta both seem to follow a more pragmatic approach in regulating captives,” he said.
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