In April 2025, the Central Bank of Ireland announced that it is exempting captive insurance companies and captive reinsurance companies from the requirement to have Solvency II returns audited.1 This is poised to make Dublin a more attractive domicile for captive insurance and reinsurance companies in Ireland.
This move aligns with a broader European trend towards easing regulatory and supervisory burdens on insurance companies, as highlighted by the European Insurance and Occupational Pensions Authority's (EIOPA) "Bolder, Simpler, Faster" initiative2 and the UK's Financial Conduct Authority's (FCA) consultation3 on simplifying insurance rules. EIOPA aims to enhance European competitiveness by simplifying regulations and reducing administrative burdens, particularly for captive insurers, through reduced reporting requirements and proportionality principles.
It's important to note that captives will still need to have their financial statements audited, and that this exemption only applies to the regulatory return and public disclosures. Captive insurers and reinsurers operating in Ireland will continue to maintain high standards of governance and risk management to ensure continued confidence from stakeholders.
What does this decision mean for our clients and the industry?
The Central Bank of Ireland's decision to exempt captive insurance companies and captive reinsurance companies from the requirement to have Solvency II returns audited may have several impacts on the insurance and reinsurance market:
Cost reduction: Captive insurance and reinsurance companies will likely experience a reduction in compliance costs. Audits are resource intensive, and removing this requirement can lead to significant financial and operational savings for these companies.
Operational efficiency: Without the need for audits, captive insurers and reinsurers may be able to streamline their operations and focus more on their core business activities rather than regulatory compliance.
Market competitiveness: Ireland may now appeal more strongly to companies seeking a cost-effective and well-regulated domicile for their captives, potentially increasing the number of new formations and redomiciliations.
Supportive regulatory environment: The exemption underscores a shift toward proportional and pragmatic regulation, encouraging growth and innovation within the captive sector.
Greater internal accountability: In the absence of formal audits, captives will need to bolster their internal control frameworks to ensure continued sound risk management and regulatory compliance.
Stakeholder perception: While many will welcome this reduction in red tape, others — such as corporate boards or external stakeholders — may seek assurance that governance standards remain uncompromised.
Take action.
Evaluate cost savings: Assess how the exemption from Solvency II audit requirements can reduce your compliance costs and allocate those savings to other strategic areas of your business.
Enhance internal controls: With the removal of audit requirements, it's crucial to strengthen internal controls and risk management processes to ensure they remain robust and effective.
Leverage competitive advantage: Explore how the regulatory changes can make Ireland a more attractive domicile for your captive insurance operations, potentially leading to increased market competitiveness.
Monitor market perception: Stay informed about how these changes are perceived in the market and be prepared to address any concerns from stakeholders regarding reduced oversight.
Strategic planning: Use the regulatory flexibility to innovate and grow within the captive sector, while ensuring compliance with other regulatory requirements.
Contact the Artex team in Dublin to learn more about the Solvency II exemptions and what they mean for your business.
