A discussion document, published on 11 June, provides clarity on how the FSB proposes to proceed with regulating 3rd party cell captive and “similar” arrangements.
Some of the key proposals include that:
- Cell captive insurance will need to be conducted under a dedicated insurance licence, and may not be combined with other forms of insurance business.
- “Similar arrangements” will no longer be permitted. Existing similar arrangements must be converted to third-party cell captive insurance arrangements in a dedicated licence.
- Third-party cell captive insurance arrangements may only be entered into with a binder holder. The binder holder must either be an underwriting manager or alternatively a non-mandated intermediary in terms of an approved affinity scheme.
- Specific criteria to operate as an approved affinity scheme is provided, and prior approval from the registrar is required before it can do business.
- Enhanced regulatory requirements will be put in place for third-party cell captive insurers
If you are currently involved in a cell captive or similar scheme, this discussion document is compulsory reading.