Amrae expects French-based captive boom in 2024

French risk management association Amrae expects the number of captives domiciled in France to grow significantly this year, going from the 14 currently in place to 25 or even 30 by the end of 2024.

It predicts that France’s new captive accounting rules and the continuing demand for alternative risk transfer tools by French companies will drive this growth. And that is because insurance buyers have not seen many signs that the hard market is over.

“The matter of insurability remains with us,” said Oliver Wild, the president of Amrae, during a meeting with the media in Paris. “We are still looking at alternatives to the pure transfer of risks to the market, as insurers are not necessarily offering the covers for all risks that companies face today.”

The latest renewals failed to allay fears that French companies will find capacity for some of the trickier risks hard to come by.

Construction risks are among the problem areas, especially when they entail the use of the new technologies and innovation. Local governments continue to struggle to find some of the covers they need, and insurance for clean energy production remains challenging, said François Beaume, an Amrae vice-president, during the same media event.

“And there is everything related to ESG, to the relationship with ESG policies implemented by insurers, and how those policies are transmitted to their underwriting strategies and their capacity to insure risks,” he said.

The settlement of certain international claims within global insurance programmes is another issue that worries French risk managers today, he added.

Alain Ronot, another Amrae vice-president, noted that finding capacity in some insurance lines remains as hard as ever.

“In the final days of the renewals, we had huge tension in the market concerning political risks and terrorism,” he said. “It is a market that is increasingly complex due to the geopolitical moment. It is a real topic of concern for risk managers.”

Wild reported that some progress was made during renewals but stressed that the insurance market can still improve. He noted that buyers have found new exclusions added to their programmes, for example.

“And we still see some reticence regarding the appetite of insurers for risks that are among the biggest issues for companies, such as the climate, ESG, natural catastrophes and geopolitical risks,” Wild pointed out. “Companies have already identified and elaborated strategies about some of those risks. Strategies to adapt themselves to climate risks, for example, and are implementing them, which are not necessarily taken into account by insurers today.”

Such issues will be discussed at several sessions in early February in Deauville, Northern France, during the 31^st edition of Les Rencontres de l’AMRAE, the annual meeting of French risk managers.

And so will captives, which a growing number of insurance buyers see today as a tool to mitigate the problems they face from the insurance market.

Wild said the first year of France’s new captive rules was very positive. The number of these risk retention vehicles domiciled in the country increased from half a dozen to 14 since the rules came into force.

Wild added that several new applications to set up captives have been filed and are under analysis by the regulators. By his estimation, the number of French captives could more than double during the course of 2024.

Amrae has worked to create a federation of French captive owners, which is also growing. The number of members is set to go from six to nine in the next few months.

The federation aims to promote the development of captive service providers in France and explain the benefits of captives for French companies.

Wild said a growing number of smaller French firms are showing interest in setting up their own risk retention tools, which have become a realistic option now that they do not need to go to Luxembourg or Ireland to do so.

“We see plenty of interest for captives in France,” he said.

A working group has been set up by the captive federation to develop good governance practices for captives in the country.

But Wild also stressed that there is no intention, from Amrae or the captive federation, to promote the repatriation of captives set up in offshore jurisdictions back to France. He said that Amrae has no news of captives owned by French organisations moving to France.

This year’s Amrae Rencontres will start on 7 February and has more than 3,400 people signed up.

The main theme of the annual conference is ‘For the Love of Risk’, and the goal is to stress the passion for risk management and taking risks in a responsible and controlled way.

Other topics to be discussed in the three-day event include geopolitical risks, the threats and opportunities of generative AI, and the relationship between the insurance market and ESG.