Leading risk managers have urged Italian and Spanish regulators to align themselves with other European jurisdictions and make it easier for companies to set up captives in their countries.\r\n\r\nDuring the recent congress held by Spanish risk management association Agers, Grabiella Fraire, a vice-president at Italian association Anra, stressed that creating captive companies is a challenge in her country and Spain.\r\n\r\n\u201cWe face similar situations in terms of communicating to regulators what we want [regarding captive rules],\u201d she said. \u201cThe European market is moving, and in some countries simplified regulation has been issued. I hope that in the future it will be the same in our countries.\u201d\r\n\r\nLast year, France loosened its rules over captives, in a quest to convince French buyers to set up their risk retention tools in their domestic market. In Spain and Italy, however, captives still face the same regulatory requirements that apply to insurance companies.\r\n\r\nCharlotte Hedemark, president of Europe\u2019s risk management federation Ferma, said that discussions about captives are under way at the European Union level, where the Solvency II directive has been going through a review for three years now.\r\n\r\nFerma has negotiated with the European Commission during this period about properly adopting the proportionality principle that would reduce the regulatory burden on captives. The commission has drafted an article about low-risk underwriters that will deal with this topic, although Ferma continues to advocate for further changes, said Hedemark.\r\n\r\n\u201cThe Spanish Presidency of the EU is intent on finalising this work before the end of the year,\u201d Hedemark said. \u201cOur outreach activities indicate that some of the member states do not favour this specific regime for captives. This is somewhat unfortunate.\u201d\r\n\r\nShe urged risk management associations to get in touch with ministries of finance in their respective countries to make the case for changes to Solvency II that would benefit captives.\r\n\r\n\u201cWith recent developments in the UK and the US, we do not want European domiciles to lose out,\u201d Hedemark remarked.\r\n\r\nBut change will not be easy. Fraire stressed that Italian insurance regulators have strong views when it comes to captive rules.\r\n\r\nHowever, companies are interested in bringing their captives into the country. Some corporations are currently negotiating with regulators about creating Italian captives, and one company has even submitted an application to set one up in the country, said Fraire.\r\n\r\n\u201cWe hope to be able share good news from the Italian side by the end of the year,\u201d she said. \u201cBut the news will not be so good as the French news. The application is a standard one, for an insurance company.\u201d\r\n\r\nA further complication for Italian companies is that there are no local reinsurers in Italy.\r\n\r\n\u201cThe regulators are worried about that,\u201d said Fraire.